Who Seeks Retirement Advice?

A recent TIAA’s report, “New Evidence on the Demand for Advice Within Retirement Plans” analyzed the use of advice in 23 of its plans between 2009 and 2014. They found that only 13% of participants sought out advice. They reported that asking for advice increases with age, account balance and annual contribution level. They also reported that investors with web access were twice as likely to look for advice as investors without web access.

Only 8% of investors in the lowest five groups with regards to their account balance, sought out advice. In the next four groups this increased to 16%, and in the top group, it was 30%. However, TIAA reported that interest in getting advice has grown substantially — from 2% in 2009, to 10% between 2012 and 2014.

20 – 29   8%
30 – 39   9%
40 – 49 12%
50 – 59 15%
60 – up 22%

Participants investing solely in target-date funds (TDFs)—the overriding default investment option—are much less likely to pursue any advice, even during turbulent markets. However, people who invest in multiple retirement plans (rather than a single plan) are more likely to seek out advice.

TIAA states, “Because participants with higher salaries are likely to receive lower income replacement rates from Social Security, their retirement account balances will need to cover a larger fraction of their retirement expenses. Consequently, we predict that demand for advice will increase with the level of the annual retirement contribution, which should be strongly correlated with the level of the participant’s salary. We [also] predict that demand for advice on retirement income levels will increase as participants approach, or pass, their Social Security normal retirement age.”
TIAA’s report can be downloaded here.

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