Due to the complex changes in their retirement plans since the financial crisis, the majority of pilots would consider using a financial advisor to manage their retirement account, according to a new survey by Cleary Gull.
“Pilot plans have changed significantly in the last few years due to airline restructuring, mergers and bankruptcies,” said Bob Warner, managing director and leader of the pilot retirement practice at Cleary Gull. He noted that airlines previously contributed a portion of a pilots pay into an employer directed defined benefit plan where professional advisors managed the money.
“Now it is in the pilots control," Warner said. "Today, employee and employer contributions are typically made to 401(k) plans. So pilots realize they need to be more involved and play a more active role in their retirement savings and investment plan.”
According to the survey, 60 percent of pilots use the brokerage window, which allows them to invest in individual stocks, bonds and mutual funds not included in their plan’s core investment line up. “It’s creating a dilemma for them but it’s also creating the motivation for them to take more control and be more involved,” Warner said.
The survey found that 80 percent of the pilots contribute to their retirement plan. Forty one percent contribute between 11 percent to 20 percent of their income, and 12 percent of pilots contribute more than 20 percent of their income.
Nearly a quarter (24 percent) already work with an investment advisor, while 63 percent indicated they want to work with an advisor to help them meet their retirement goals.
“The landscape for pilots has changed since 2008, requiring a new and maybe uncomfortable focus process for pilots to meet their goals,” Warner said. “They have realized they need to take a more active role, but it requires time, knowledge, expertise and confidence. Many are seeking outside guidance to help them with the complexity.”
Milwaukee, Wis.-based Cleary Gull, an investment banking and wealth management firm, surveyed 182 United and Continental pilots who are part of legacy 401(k) retirement plans.