There is no doubt that a successful retirement outcome requires a plan, discipline and the knowledge to make good choices that address each individual’s long-term retirement goals. And, there is a growing amount of measurable data that supports having the guidance of a financial advisor to help deliver that successful outcome.
In recent studies by deKadt Market Research (2018, commissioned by AXA Equitable)[1] and The Planning & Progress Study (2018, commissioned by Northwest Mutual)[2], there is evidence that the active assistance of a financial advisor has a major impact on not only the process of retirement planning, but also on the successful outcome.
The deKadt Study surveyed participants in 403(b) retirement plans regarding their feelings on the use of financial advisors, the process, and the expected outcomes of their planning processes.
Key findings included:
- Participants who use a qualified financial advisor have nearly double the median account balance than those who do not.
- Participants who work with an advisor have 15% greater diversification of assets. More than half of participants in this study attribute an early start in saving to the influence of a trusted advisor.
- Participants who use an advisor contribute 49% more annually on average.
- Participants who work with an advisor are significantly more likely to have increased their contributions 24% more often since opening their account.
- Participants report higher satisfaction (72% vs. 54%) with their 403(b) plan overall and higher confidence (64% vs. 56%) in meeting their retirement goals when working with a financial advisor than those who do not.
Footnotes
[1]The Value of the Advisor: https://us.axa.com/news/403b-advisor-value/ssi/Valueoftheadvisor_White%20Paper%202018.pdf
[2] Advisors: Key to Financial Clarity: https://filecache.mediaroom.com/mr5mr_nwmutual/178216/advisor%20deck%207.3.pdf
Editor’s Note: This is an occasional feature in the NTSA Advisor. This tip is taken from the 403(b) Plan Sponsor Guide, which is being made available to school districts nationally to assist them in understanding how to improve 403(b) plan participation and savings rates to help employees achieve a comfortable and timely retirement.
The 403(b) Plan Sponsor Guide is part of the content contained in the NTSA Certified Retirement Education Specialist (CRES) materials. The NTSA Certified Retirement Education Specialist (CRES) program and designation has been developed in order to equip advisors to be qualified and available to teach the NTSA educational program, which is designed to provide teachers with the basics of planning for retirement and improve their retirement readiness. More information about CRES is available here.
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