Majority of 401(k) Participants Want to Work with a Financial Advisor, Yet Barriers Persist, Financial Engines Survey Shows
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Overwhelming Majority of Participants Say They Want an Advisor Legally Required to Act in Their Best Interests

SUNNYVALE, CALIF.--(BUSINESS WIRE)--Oct. 13, 2015-- In the last 20 years, innovations in 401(k) plan design and retirement help such as online advice, professionally managed accounts and target date funds have made retirement planning easier for 401(k) participants. According to a new survey of over 1,000 401(k) participants by Financial Engines (NASDAQ:FNGN), what employees want next is a person in their corner. The survey1 shows that a majority of 401(k) investors not currently working with a financial advisor – 54 percent-- are interested in working with a financial advisor in the future.

Strong Desire for an Advisor That Meets the Fiduciary Standard

When asked about the desired attributes of a financial advisor, 69 percent of participants said that it was “very important” that their financial advisor be legally required to act in their best interest. Another 18 percent said that it was “somewhat important.” Less than two percent said that their advisor being a fiduciary was “not very” or “not at all” important.

Groups who stated that an advisor’s fiduciary status was very important included investors who use target date funds (76 percent), investors not currently working with an advisor but interested in doing so (73 percent), those with assets between $100,000 and $500,000 (72 percent), and investors who already work with an advisor (70 percent).

“While technology can broaden the access people have to investment advice, we’ve found that many people value the ability to talk with a professional advisor, whether just to ask questions or to develop their retirement plan,” explained Kelly O’Donnell, a Financial Engines executive vice president. “Our survey shows that in addition to wanting more personal guidance, people feel very strongly about wanting an advisor who is on their side, placing their interests first.”

Despite Desire, Barriers Persist

Despite the desire to work with a financial advisor, the most commonly cited barriers included affordability (46 percent), believing they didn’t have enough assets to get an advisor’s attention (36 percent) or uncertainty how an advisor could help them (26 percent). Twenty-three percent of investors said that they preferred a do-it-yourself approach to handling their investments.

The Human Touch

While interest in online advisory services was strong (60 percent), it was even stronger for services that included access to financial advisors (68 percent). According to respondents, the top reasons people use financial advisors included the ability to avoid costly mistakes (44 percent), greater peace of mind or more confidence (28 percent) and the ability to further personalize financial plans and strategies (25 percent).

The financial topics of most interest to participants went beyond traditional retirement planning. According to the report, 401(k) participants are most interested in receiving help with:

  • Determining the appropriate savings rate to reach their retirement goals
  • Turning their 401(k) and retirement accounts into reliable retirement income
  • Evaluating their overall financial wellness
  • Assessing individual risk tolerance
  • Optimizing Social Security claiming strategies

“It’s easy to underestimate the power of a simple conversation with someone who listens to your concerns and can provide valuable insights and help. However this research validates our own experience about the important role advisors play in helping investors reach their goals,” said O’Donnell. “Financial Engines is committed to making our advisors even more accessible to help retirement investors better save and plan for a rewarding retirement.”

Copies of the report “The Human Touch: The Role of Financial Advisors in a Changing Advice Landscape” are available at http://corp.financialengines.com/research/FE-The-Role-of-Financial-Advisors-1015.pdf.

About Financial Engines

Financial Engines is America’s largest independent investment advisor.2 We help people make the most of their retirement assets by providing professional investment management and advice. Headquartered in Sunnyvale, CA, Financial Engines was co-founded in 1996 by Nobel Prize-winning economist Bill Sharpe. Today, we offer retirement help to more than nine million employees across 600+ companies nationwide (including 143 of the Fortune 500). Our investment methodology, combined with powerful online services, dedicated advisor center and personal attention allow us to help more Americans get on the path to a secure retirement.

Advisory and sub-advisory services provided by Financial Engines Advisors L.L.C., a federally registered investment advisor and wholly-owned subsidiary of Financial Engines, Inc. Financial Engines does not guarantee future results.

Forward-Looking Statements

This press release contains forward-looking statements, including statements regarding the use of professional investment and financial planning help, which involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are outlined in our SEC filings. You are cautioned not to unduly rely on these forward-looking statements, which speak only as of the date of this press release. Unless required by law, Financial Engines undertakes no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this press release or to report the occurrence of unanticipated events.

1 Financial Engines commissioned survey of >1,000 full-time employees between ages 18-70 that participate in their employer’s defined contribution plan. Survey conducted and completed in August 2015.

2 For independence methodology and ranking, see InvestmentNews Center (http://data.investmentnews.com/ria/).

Source: Financial Engines

Financial Engines
Mike Jurs, 408-498-6590
mjurs@financialengines.com
or
Allison+Partners
Alexandra Gardell Kreuter, 646-428-0618
financialengines@allisonpr.com