Employer-Sponsored Retirement Plans

Younger Investors Shifting Away From Advisors

Study: Plan participants under-35 choosing to go it alonoe

CHICAGO, IL–(Marketwired – Dec 16, 2015) – According to a new Spectrem report, more than 40 percent of participants in employee-sponsored retirement savings plans who are under age 35 say they are shifting more towards making their own investment decisions rather than using an advisor, and one-third of participants age 35-49 indicate a similar shift.

Overall, slightly more than half (54 percent) of plan participants use an advisor, but only 45 percent of them say they rely on and trust their advisor for the vast majority of their financial needs.

The report, Advisor Usage Among DC Plan Participants, is based on a survey of 986 individuals who participate in an employer-sponsored retirement savings plan such as a 401(k), 403(b) or 457 plan. One-third of participants say they do more of their own investment research today than in the past, and investors under 35 lag far behind other age groups in their satisfaction with advisor services.

This dissatisfaction with advisors manifests in respondents’ attitudes about account statements and face-to-face meetings.

Other study findings include:

  • The percentage of participants indicating they are likely to drop or replace their advisor in the coming year has declined by three percent from the previous year to nine percent.
  • Advisor communications continue to leave investors unimpressed. Excellent ratings were low for newsletters (15 percent), blogs (2 percent) and social media (2 percent). Nearly half of respondents rated advisors’ blogs (46 percent) and social media activity (50 percent) as poor.
  • Of the top five reasons investors said they would fire an advisor, four were about communication and only one relates to performance.
Of the top five reasons investors said they would fire an advisor, four were about communication and only one relates to performance

“Providers have a significant opportunity to retain and grow their business by strengthening their engagement with plan participants,” said Spectrem President George H. Walper Jr. “As the U.S. population ages, these opportunities for engagement will only increase, since more than 30 percent of plan participants say they will be seeking advice on planning for long-term care, implementing tax-advantaged strategies and establishing an estate plan.”

Additional information on Spectrem studies can be found at Spectrem.com and Spectrem’s Millionaire Corner, including:
Do Participants Use Advisors?
Plan Participants’ Attitudes Toward Advisors



About Spectrem Group
Spectrem Group (www.spectrem.com) strategically analyzes its ongoing primary research with investors to assist financial providers and advisors in understanding the Voice of the Investor.