A few years back, Charles Schwab released a study entitled, “The New Rules of Engagement for 401(k) Success.”  70% of the survey respondents said their 401(k) is their only or primary source of retirement savings.  However, only 42% reported having received professional financial advice in the past two years.

Schwab’s analysis found that the use of advice can have a significant impact on people’s behaviors in 401(k) plans.  Specifically, use of professional advice has a positive impact on participant savings, diversification, and investing behavior.  For example:

  • Improved savings rates – 70% of participants who receive 401(k) advice make changes to their deferral rates, and their savings rates nearly double as a result, jumping on average from 5% to 10% of pay.
  • Greater diversification – The average participant who has not received professional advice is invested in less than 4 (3.7) asset classes, whereas participants who receive advice have a minimum of eight asset classes.
  • More disciplined investing behavior – The vast majority (92%) of advice users stayed the course in their 401(k) portfolios from July 2008 through February 2009 and were fully invested for the significant market rebound through the remainder of 2009.

The survey also noted that less than half (47%) of 401(k) participants surveyed feel very confident when it comes to making investment decisions and 53% say they find retirement plans even more confusing than health care benefits.

Did you know that Chladek Wealth Management provides investment advisory services for participants in employer-sponsored retirement plans (401k, 403b, 457, TSP, etc.)?  If you would like an analysis of your current 401(k) account (or other type of employer-sponsored plan), please call me to schedule your free consultation – 913.402.6099.

About the Charles Schwab New Rules of Engagement Study

Participant survey data was derived from responses of 1,005 U.S. consumers who are employed full or part-time and participate in their company’s 401(k) retirement plan.  The online survey was fielded by Koski Research from June 9-17, 2010.

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John P. Chladek, MBA, CFP® is the President of Chladek Wealth Management, LLC, a fee-only financial planning and investment management firm specializing in helping families and couples who are not yet retired realize their financial goals. For more information, visit https://www.chladekwealth.com.

All written content on this site is for information purposes only. Opinions expressed herein are solely those of John P. Chladek, MBA, CFP®, President, Chladek Wealth Management, LLC. Material presented is believed to be from reliable sources and we make no representations as to its accuracy or completeness. All information and ideas should be discussed in detail with your individual advisor prior to implementation. Investment Advisory services are offered by Chladek Wealth Management, LLC, a registered investment advisory firm in the State of Kansas. The presence of this web site on the Internet shall in no direct or indirect way be construed or interpreted as a solicitation to sell or offer to sell investment advisory services to any residents of any state other than the State of Kansas or where otherwise legally permitted.

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