Betterment for Business Survey Shows that Majority of Employees Do Not Receive Advice on their Retirement Investments

NEW YORK, Sept. 11, 2017 /PRNewswire/ --

New consumer retirement survey reveals:

• The traditional timing, cadence and channels for delivering financial advice may be misaligned to employee preferences.
• For those that do seek advice, most use a financial advisor - and trust the advice they are receiving.
• Behavioral "nudges" like auto-enrollment and auto-escalation are welcomed and effective in helping people save more for retirement.

Betterment for Business, the technology-led 401(k) provider that aims to deliver better retirement outcomes and personalized advice, today announced the results of its new consumer retirement survey, the State of Consumer Retirement Advice. The results of the survey show that alongside the expansion of digital and employer-sponsored retirement advice resources, a majority of respondents (53 percent) report receiving absolutely no advice on their retirement investments. For the 47 percent of consumers who do seek retirement advice, 65 percent of this group utilize a financial advisor, the top source of advice among those consumers. Despite growing awareness of the Department of Labor's Fiduciary Rule, which brings to light the fact that some consumers receive conflicted retirement advice, financial advisors are still highly trusted - with 79 percent of those that use an advisor either fully trusting them or placing a lot of trust in them.

"The recent fiduciary ruling developments have spurred conversation around what credible advice should look like, and many advocates of the rule have hoped that investors would demand accountability from their financial professionals," said Jon Stein, CEO, Betterment. "All savers have the right to sound, reliable and personalized advice on their retirement investments, and as people demand and exercise that right, retirement outcomes can improve."

Conducted by global research company Market Cube, the Consumer Retirement Advice Report surveyed 1,051 consumers who work at small and medium-sized businesses and currently contribute to their employer-sponsored 401(k) plan. Notable findings of the survey are detailed below.

Employees want retirement advice on demand and through digital channels

The traditional timing, cadence and channel of delivering financial advice may be misaligned to employee preferences. The majority of survey respondents (53 percent) report receiving absolutely no advice on their retirement investments, which is counterintuitive given the demographics of all survey respondents suggest that they would have access to employer educational materials and digital resources.  When asked how they would like to receive advice, respondents reported preferences for receiving advice as often as they have questions and through channels like email and 1:1 sessions.  Least preferred channels included mail and once a year employer-sponsored information sessions.  Notably, the most preferred cadence for advice was as often as they have a question (28 percent), suggesting a preference for on-demand advice.  Across generations, millennials expressed the most interest in an advice cadence of more than once a month.

Fiduciary awareness is slowly taking hold, but there is still room for improvement related to consumer action

Employees still trust their financial advisors, and many are not making any changes since the ruling has been publicly discussed.  Less than half of respondents (42 percent) correctly identified the definition of a fiduciary; 20 percent of respondents believed that the terms "fiduciary" and "financial advisor" are synonymous, and 27 percent did not know what one was at all. Of those aware of the Department of Labor's Fiduciary Rule, 84 percent have taken no action (such as asking their advisor if they are a fiduciary) based on their understanding of the ruling. However, of those who have taken action, 48 percent found a new financial advisor.

Behavioral "nudges" are welcomed and effective in helping people save more for retirement

Nearly all (94 percent) of respondents in a 401(k) with auto-enrollment, which allows an employer to "enroll" an eligible employee in their plan unless the employee affirmatively elects otherwise, currently make contributions to their plan. In fact, for those who remained enrolled, 49 percent of respondents increased the contribution rate. Millennial respondents were most likely to remain enrolled in the plan after auto-enrollment. 78 percent of respondents that have access to an auto-escalation feature, which gradually increases plan contribution amounts over time, use it.  Millennials seem to like auto-escalation—but in practice, might not be using it most effectively, further underscoring the need for relevant, timely advice and education. 41 percent say it helps them save more, but 13 percent say they elected to save a lower percentage now because they know the deferral rate will go up.

Employees are leaving money on the table

Targeted education could go a long way in setting consumers on the right path--given that 89 percent of respondents were offered a 401(k) match by employers, but 23 percent didn't take full advantage of it. Of those 23 percent, 16 percent don't max out their match, and 7 percent don't know if they do. Respondents who have only had a 401(k) for 1-2 years make up the largest percentage of those who don't know if they are maxing out their match.

To learn more about the survey results, please visit this infographic.

To learn more about Betterment for Business, please visit www.bettermentforbusiness.com.

Contact Info:

Joe Ziemer, [email protected], 212-228-1328

Arielle Sobel, [email protected], 212-228-1328

Danielle Shechtman, [email protected], 212-228-1328

Survey methodology

As commissioned by Betterment for Business, the State of Consumer Retirement Advice was an online survey conducted by Market Cube in July and August 2017. Respondents included 1,051 consumers who work at small and medium-sized businesses with less than 1,000 employees, have a work email address and currently contribute to their employer-sponsored 401(k) plan.

About Betterment for Business

Betterment for Business is a 401(k) service built from the ground up with the needs of the modern employee in mind. It's selected by employers who want to offer their employees tailored and smart financial advice that will help them create a more secure future. Betterment for Business is powered by Betterment's proprietary, smart technology that automates and optimizes asset allocation to enhance financial wellness. As a fiduciary that is independent of the funds it invests in, Betterment believes that everyone has the fundamental right to expert financial advice. Headquartered in New York City and created by the largest independent robo-advisor, Betterment for Business is used by leading employers like Casper and Boxed. For more information, visit www.bettermentforbusiness.com.

Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Determination of largest independent robo-advisor reflects Betterment LLC's distinction of having highest number of assets under management, based on Betterment's review of assets self-reported in the SEC's Form ADV, across Betterment's survey of independent robo-advisor investing services as of July 11, 2016. As used here, "independent" means that a robo-advisor has no affiliation with the financial products it recommends to its clients. 401(k) plan administration services provided by Betterment for Business LLC. Investment advice to plans and plan participants provided by Betterment LLC, an SEC registered investment adviser. Brokerage services provided to clients of Betterment LLC by Betterment Securities, an SEC registered broker-dealer and member FINRA/SIPC. Betterment LLC and Betterment Securities are affiliates of Betterment for Business LLC.

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SOURCE Betterment for Business