A majority of retirement plan participants feel it is very important for their financial advisors to be legally bound to put the investors’ interests first, according to a survey released Tuesday.
Sixty-nine percent feel their advisor should be legally required to act in their clients’ best interests, while another 18 percent think it is somewhat important. Only 2 percent say it is not very or not at all important, according to the survey, "The Human Touch: The Role of Financial Advisors in a Changing Advice Landscape." Financial Engines, an independent financial advisor for more than 600 retirement plans based in Sunnyvale, Calif, conducted the survey of 1,000 retirement plan participants.
A majority of those 401(k) investors (54 percent) who are not working with an advisor now would like to work with one in the future, the survey says.
In the last 20 years, innovations in 401(k) plan design and retirement help, such as online advice, professionally managed accounts and target-date funds, have made retirement planning easier for 401(k) participants, says Financial Engines.
“While technology can broaden the access people have to investment advice, we’ve found that many people value the ability to talk with a professional advisor, whether just to ask questions or to develop their retirement plans,” says Kelly O’Donnell, a Financial Engines executive vice president. “Our survey shows that in addition to wanting more personal guidance, people feel very strongly about wanting an advisor who is on their side, placing their interests first.”
The five top reasons investors want to have a financial advisor are to help determine the appropriate savings rate to reach their retirement goals; to help turn savings into reliable retirement income; to help evaluate overall financial wellness; to assess risk tolerance; and to optimize Social Security.
The report is available here.