A new study by the Spectrem Group's Millionaire Corner found that half of 401(k) plan participants between 50 and 64 aren't using a financial advisor as they prepare for retirement. Among those who do, just 40% say they rely on their advisor's guidance for the majority of their financial needs.
The report, "Advisor Usage Among DC Plan Participants," found a third of respondents were referred to their advisor by a friend or family member. Referrals from people they knew were far and away the most popular way investors learned about an advisor.
Just 9 percent of respondents said they found their advisor on a website, and 7 percent said they were introduced at a seminar or special event. Only 6 percent said they were contacted by an advisor first.
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While both men and women were more likely to rely on a referral, men were more likely than women to say they found their advisor online. Thirteen percent of men went online to find an advisor, compared with 5 percent of women. Nearly half of women said they chose their advisor based on a referral, compared with 27% of men.
"Despite research showing that the majority of Americans are insufficiently prepared for retirement in terms of their savings and investments, the majority of defined contribution plan participants continue to view their 401(k) accounts as a savings plan," George Walper, president of Spectrem Group, said in a statement. "Nearly all, however, could benefit from having access to regular financial advice on how to make the most of their portfolio."
Retirement plan participants are generally satisfied with their advisors' services, according to the report. Although only half of respondents are using an advisor, two-thirds of those said they were satisfied with their services. Seventy percent said they liked how responsive their advisor was to their requests.
Almost 60 percent of plan participants have a written plan from their advisor, and 96 percent of them say they're at least somewhat satisfied. Fifty-two percent said they were very satisfied.
Among participants with the highest account balances, those with at least $100,000, 27 percent say they have a financial plan and 35 percent say they will have one soon.
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