A new 401(k) literacy survey released today shows that 84% of Americans who participate in a workplace retirement plan and work with a financial advisor feel confident in securing a stable retirement plan. The answer is yes.
Image provided by: Pontera
The first-ever Pontera 401(k) Literacy Study found that plan participants who work with a financial professional feel more confident about their retirement future, are more informed about their plan, and feel more self-motivated. Contributions to accounts have also increased.
A national survey of 2,010 full-time employed workplace retirement plan participants in 50 states found that 8 out of 10 recommended participants and 100% of baby boomers enjoyed great peace of mind and confidence It turned out that it was. These participants are also more committed to their plans and more likely to maximize their annual contributions than non-advised employees.
Other key findings include:
• 90% of respondents who received advice believe their 401(k) allocation is consistent with their overall financial plan, compared to 75% of respondents who did not receive advice. did.
• 66% of participants who received advice maxed out contributions to their work accounts, compared to 40% of participants who did not receive advice.
• Advised participants say they contribute an average of 15% of their income to a work account, compared to 10% of unadvised participants.
“Our research confirms what we have been saying for years: Advisors help retirement savers achieve better outcomes,” said Pontera Co-Founder and Chief Executive Officer. said Yoav Zuler. “The amount and complexity of information that must be absorbed is enormous, so when we have an advisor who educates and guides participants, we see participants feel more confident and invest in their 401(k). That is reassuring.”
“It’s heartening to see participants feel more confident and invested in their 401(k)s when they have an advisor to guide them.”
Pontera CEO Yoav Zuler
New York-based Pontera is a fintech company founded in 2012 that allows retirement savers to receive personalized 401(k) account management from trusted financial experts through its secure customer authorization platform. We set out to identify the challenges that U.S. workers face in managing. Employer-sponsored 401(k), 457(b), and 403(b) plans. By design, half of respondents employ financial professionals and half do not, so Pontera can compare the knowledge and sentiment of each group to determine whether advisors are influencing their clients regarding workplace planning. You can decide whether
Pontera research shows that 81% of retirement savers consider a 401(k) to be the most important part of their retirement savings plan, compared to 67% for traditional IRAs and 61% for both Roth IRAs and pensions. It was confirmed that Americans say there are many reasons to participate in a workplace-sponsored plan, but the most important are employer matching contributions, automatic payroll deductions, investment benefits for pre-tax funds, and tax-deferred growth.
Knowledge gap: Help is needed
Still, significant knowledge gaps exist that hinder participants from getting the most out of their retirement accounts. The survey found that 8 in 10 respondents say they experience at least one challenge managing their workplace plans. Similarly, 87% have at least one challenge when choosing investments, and this number rises to 92% for Gen Z respondents. Other findings include:
• 74% would welcome help from an account management expert and 77% would be willing to pay for advice.
• 59% said they have questioned their 401(k) investment decisions.
• 50% say they are confused about understanding their planning options.
Overall, Pontera has found that a significant number of 401(k) participants struggle to fully understand the plan’s contents. As part of the survey, Pontera provided respondents with a nine-question 401(k) Literacy Quiz designed to measure their knowledge of retirement plan features and rules.
The study found that Americans may be overestimating their fluency when it comes to workplace retirement accounts. 6 out of 10 401(k) participants consider themselves to be “financially literate,” but 85% could not answer all questions correctly and 46% of respondents received a “C” or lower. obtained a score of.
Notably, 74% did not know at what age they could start collecting insurance premiums. Also, many people did not know that they had to pay taxes on early withdrawals. Nearly one-third of 401(k) participants couldn’t remember how much they paid in plan fees.
“Financial literacy is a huge issue in our society when individuals are responsible for saving for retirement,” Zuler said. “These knowledge gaps highlight the critical need to find additional ways to support and educate retirement savers. We believe financial advisors are in an excellent position to provide such support. I believe there is.”
Advisor value
Fortunately, the picture is much brighter for participants who work with financial professionals. Pontera’s research and its own comparisons show that when participants receive individualized support, their 401(k) commitment and sense of security for a secure retirement increase.
Advisors positively impact their clients’ 401(k) accounts in a variety of ways.
• 81% of respondents who received advice know how much they will pay for their plan, compared to 62% who do.
Percentage of respondents who did not receive advice.
• Advised clients are more likely to know that catch-up can begin after age 50.
• 51% of Americans with an advisor check their balances and contributions at least weekly, compared to 34% of Americans without an advisor.
• 48% of advised participants monitor portfolio performance compared to 32% of non-advised participants.
Research shows that advisors help employees manage their retirement plans, including helping participants assess risk tolerance, evaluate tax implications, and allocate assets in line with a comprehensive plan. It helps you overcome complexity. It also helps clients better understand fees, contributions, and investment performance.
“It is clear that enabling personalized 401(k) advice within a plan from a trusted advisor is an important solution to the challenges faced by many retirement savers,” said Pontera. said David Goldman, Chief Business Officer. “Personal guidance from an expert advisor can help close the 401(k) literacy gap, give retirement savers greater peace of mind and prepare for retirement.”
This survey was conducted by Harris Poll on behalf of Pontera in July 2024. All 2,010 respondents were based in the United States, were 18 years of age or older, were employed full-time, and had employer-sponsored 401(k) or 403 eligibility. (b), or 457(b) retirement savings account.
To learn more about the study, download a copy of the 2024 Pontera 401(k) Literacy Survey at info.pontera.com/survey.
See also:
• Corporate Overview: Pontera, 401GO Partnership
• Pontera, a Stifel partner that securely manages client 401(k)s.
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist in January 2019 as editor-in-chief. He has led editorial content for a variety of well-known institutions, including Insurance Forum, Life Insurance Sales, National Insurance Company Life & Health, and Senior Market. Advisor. He has always focused on providing timely, useful information to help his readers build their businesses.
