A new survey from Betterment for Business, the firm’s 401(k) operation, finds that many plan participants want a lot more service than their plans provide, including personal financial advice and need financial education.
Fifty-three percent of respondents reported that they receive “absolutely no advice on their retirement investments.” Many preferred receiving advance on demand, when they need it and through easily accessible channels such as email, plus one-on-one sessions. Millennials expressed the most interest in receiving advice more frequently than once a month.
Among the 47% who want advice, two-thirds use a financial advisor and most (79%) reported that they trust their advisor either completely or substantially.
(Related: Retirement: life’s most expensive purchase)
The survey was conducted online by Market Cube in July and August and consisted of 1,051 consumers who work for companies with less than 1,000 employees, have a work email address and contribute to their 401(k) plan.
Less than half of the respondents knew the definition of a fiduciary and 20% thought that the terms “fiduciary” and “financial advisor” were synonymous. Among those aware of the Labor Department’s fiduciary rule, 84% neglected to take an action such as asking their advisor if he or she was a fiduciary. Almost half of those who did ask changed advisors.
Another example of the need for financial education: the finding that 16% of participants with a 401(k) match failed to contribute the maximum amount that could be matched, and 7% didn’t know whether they were offered an employer match.
The survey found that nearly all respondents (94%) whose plans include auto-enrollment participated in their 401(k) plan (they have the ability to opt out), and 78% took advantage of the auto-escalation feature, if it was available. But some said they chose to save less now knowing that the deferral rate would increase in the future because of auto-escalation.
On the Friday before Betterment for Business released the survey, it convened a meeting with the members of its advisory board and the press chaired by its founder and CEO, Jon Stein, to discuss how 401(k) plans can best provide participants with the benefits they need.