Employers have been sponsoring investment advice programs for years, but employees don’t use them equally.
While rates of usage have increased by 10% in the last decade, according to Hearts & Wallets, an independent financial industry research firm, they differ according to employee age. In a recent survey of 5,794 U.S. households, researchers found that roughly two in three Generation X and Millennial households consult 401(k) and 403(b) representatives and advisors to some degree, with usage increasing in 2022. Gen X use is 65%, and Millennial, 61%. Only one in three Baby Boomer households seek financial advice from such employer-sponsored programs.
However, among all employees relying on these advisors for advice, only about 8% do so as a primary source. Age, assets, and income had no effect on the behavior. About 60% seek such investment guidance “sometimes” or “usually,” according to the report.
The research also addressed issues of leaving money in plans sponsored by former employers. Only 9% of those surveyed said they were “comfortable” doing so, while 73% of those who said they were “very uncomfortable” leaving money in plans of old employers reported that they “never” use that company’s resources.
As Millennials’ wealth increases, the report found that employer resources usage increases, too. The Gen X trend is similar, though it occurs with less frequency.
A large chunk of respondents said they use a variety of sources for investment advice. 43% said they consulted seven or more sources, compared to 14% who reported such use in 2010. Millennials with $100,000 to $1 million in assets comprised the group most likely to use such a number of sources to some degree.
“Customers and prospects are interacting with more sources than ever to make investing decisions,” Laura Varas, Founder and Chief Executive Officer of Hearts & Wallets, told the National Association of Plan Advisors. “To craft service models and distribution strategy, firms should understand investor behaviors at the national level, but more importantly for their specific design targets.”
