Retirement Outlook Hinges On Professional Advice

By Cyril Tuohy

InsuranceNewsNet

Employees who use advisory services offered to them in their 401(k) plan have a more positive outlook about their future retirement compared with employees who ignore such services, according to a new analysis of the 2012 Mercer Workplace Survey.

Nearly one-fifth (18 percent) of survey respondents said they engage with an online or in-person advisory service in their 401(k) plan. These participants are much more likely to feel that they will have enough money for retirement, can live as well or better than when working and will not have to delay retirement, the survey found.

“This is great news for plan sponsors who offer advisory services in their 401(k) plan, as there is a clear correlation between positive retirement sentiment and engagement with these services,” Dave Tolve, administration product leader for Mercer, said in a statement. “Yet, with relatively low usage among participants — especially when you start to look at the demographics — there is still work to be done.”

The 2012 Mercer Workplace Survey of 1,656 participants also revealed that awareness and availability of in-plan investment advice is high. Nearly four out of five participants (79 percent) said that their plan offers some type of advice (online, in-person/telephone, or both), up from 72 percent in 2011.

Looking at the demographics of typical in-plan advice users compared to those who do not use these services shows participants who are younger, better-educated and have higher incomes, balances and deferral rates.

Suzanne Nolan, administration marketing and communications leader for Mercer, said that the real challenge for employers lies not necessarily in reaching young, better-educated employees with decades in the workforce before they retire, but rather in communicating to lower-income employees with only a few years left before retirement.

“The true challenge for a plan sponsor offering in-plan advice is to reach those on the lower end of the income spectrum, where ‘every dollar counts’, and who may also have a shorter time frame in which to accomplish their retirement savings goal,” Nolan said in a statement.

The 2012 Mercer Workplace Savings tracks employee attitudes toward, and experiences with, employer-sponsored retirement, health and benefits programs.  Online interviews were completed last June.

Cyril Tuohy is a writer living in Pennsylvania. He has covered the financial services industry for more than 15 years. He has also written about food, restaurants and travel. He can be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].