6 reasons your pre-retiree employees might actually prefer retail advice

Workplace plans have room to improve when it comes to serving older workers.

(Photo: Shutterstock)

Workplace retirement plan providers haven’t done a good job marketing themselves as an investment resource to older workers, according to a survey by Hearts and Wallets.

The report found 56% of workers between ages 55 and 64, and 77% of workers over 65, have never used their employer-sponsored plan provider for investment information or advice. By comparison, the share of younger workers who have never used workplace resources was on average 38%.

Related: Retirement preparedness plunges in older workers

It gets worse. Only a third of the tiny share of older workers who do value their workplace resources say they understand where their retirement income will come from.

Hearts and Wallets used data from its Investor Quantitative and Explore Qualitative databases, which include data on 43.5 million households between ages 55 and 74.

The company identified six reasons older workers aren’t connecting with the retirement and investing resources offered through their workplace plans:

  1. The advice provided is too generic to serve individuals’ needs.
  2. Workers feel the reps who are available through the workplace plan don’t have enough experience.
  3. Workers don’t get enough outreach from the plan to feel like reps care about them.
  4. Some workers believe the employer is the one providing the advice, and doubt the abilities of those that aren’t in the financial industry.
  5. After retirement, older workers fear they will lose access to resources available through their former employer.
  6. Employees’ personal finances are none of the employers’ business.

Hearts and Wallets found pensions are highly valued by these older workers. Nearly two-thirds of workers with access to a pension feel secure about their retirement prospects, a share that jumps to 80% among workers who will get at least half of their retirement income from a pension.

Workers with a corporate pension were half as likely as those with a government pension to say they feel anxious about their prospects.

Related: Can designing DC plans with deferred income annuity options help fill the pension gap?

The study found workers are getting less resistant to leaving savings in a workplace plan until they begin drawing down assets, and “receptivity might increase as more in-plan income solutions are developed and launched,” according to the report.

Considering over half of older workers are more likely to recommend an advisor when they have both a workplace and a retail account firm (compared to 32% with just a workplace plan and 42% with just a retail plan), Hearts and Wallets believes leaving their assets in the plan and “getting advice in retail may be the best solution. Guidance on housing, tax optimization and work outlook may be very difficult, if not impossible, in the context of the workplace, and probably can be more appropriately addressed in retail service models.”

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