March 31, 2015 Washington Wire

401(k) Investors Seek One-On-One Advice

WASHINGTON – Investors in defined contribution benefit plans such as 40(k)s who believe they need advice find one-on-one meetings with a financial professional the best way to go, according to a new Wells Fargo/Gallup poll.</p>

The poll said that most investors approve of the way their employer helps them manage their retirement plan. At the same time, the poll found that 25 percent have problems with the way their employers help them invest their retirement funds. Pollsters said this finding “represents an important information gap that warrants attention.”

The poll said almost two-thirds of employed investors who have a self-directed defined contribution plan believe they can self-direct their investments.

That contrasts with a finding in an earlier poll, which found that only 18 percent of U.S. investors said they wanted more financial advice from their employer.

However, 35 percent said they need advice, and 71 percent of those said having a personal session with an advisor is the best way to obtain that advice, according to the poll.

The poll found that of those who seek advice, 32 percent said they need advice on which mutual funds to invest in; 29 percent said they want to know whether to reallocate their funds as conditions change; 8 percent want to know how much to contribute to their plan; 4 percent want to know the tax advantages of 401(k) plans, and 1 percent want to know whether they should use the money in a retirement plan before they retire.

The findings are from the Wells Fargo/Gallup Investor and Retirement Optimism Index 2015 first quarter survey. For the survey, investors are defined as U.S. adults who have at least $10,000 invested in stocks, bonds or mutual funds. According to Gallup, about three in four employed investors say they have access to a 401(k)-type retirement savings plan at work.

In its report on the latest poll, Gallup said that “most employers probably do not want to take responsibility for advising employees about critical financial decisions.” These include such decisions as responsibility for advising employees about critical financial issues, such as what to invest in and when to reallocate investments in response to market conditions.

But, the poll report said, “given investors’ reported needs and views about various sources of information, employers could do more to connect workers who are seeking advice with financial professionals who can personally guide them.”

Among those who seek investment advice, 46 percent said the best way employers can help them is by sponsoring a seminar or other formal presentation. Forty percent favored having their employers put information on the company’s internal website; 33 percent wanted their employers to provide brochures or other written material; 21 percent favored their employers sending information to employees’ mobile devices, and 11 percent wanted employers to post information on social media.

InsuranceNewsNet Washington Bureau Chief Arthur D. Postal has covered regulatory and legislative issues for more than 30 years. He can be reached at [email protected].