Financial advisors are missing an opportunity if they do not start providing better services for retirement plan participants, according to a new study by Spectrem.
A significant number of participants in defined-contribution retirement plans use outside advisors for investment advice because they feel they cannot get the level or quality of assistance they want from the advisors for the retirement plan, according to the study.
Many of those who use an outside advisor for their 401(k) or similar retirement plan use the same advisor for all their investment needs, the report said.
"Advisors can increase their share of wallet from existing clients by developing a plan for their clients defined-contribution assets," the report concluded.
At the same time, "retirement providers should improve the level of assistance available to participants" in order to gain their business, according to the study.
Some 22% of defined-contribution plan participants use a professional advisor not affiliated with their plan to assist in managing their plan investments, according to the Spectrem survey of 1,583 defined-contribution plan participants.
Nearly half of those looked to the plan advisor first but could not get the quality of assistance they wanted or could not talk to the same person each time they called. "These participants wanted a relationship, not just one-off answers to their questions," the study said.
An equal number had a relationship with an advisor for other investment advice first and it expanded to include their retirement fund, which points out the importance of advisors looking at all retirement assets when talking with their clients, said Spectrem.
Of those who use an outside advisor, nearly 60% say the advisor helps them with all of their investments.
Those looking for outside advice turn to full-service brokers (26%) or independent financial planners (24%) most of the time. Mutual fund representatives, registered investment advisors and bankers are next.