Defined contribution plan participants consider their 401(k) balances and similar investments to be their own investment strategy and give little credit to advisors who assist them in handling their investments.
According to Spectrem’s Defined Contribution Participant Series report Advisor Relationships and Changing Advice Requirements, 56 percent of DC plan participants have a primary financial advisor, and they only consult their advisor on less than 20 percent of their investment funds. This indicates a personal approach to investing that advisors should consider when offering assistance.
Asked “To whom would you attribute your financial success?” and further asked to place their opinion upon a sliding scale from 0-100, in which “0’’ was themselves and “100” was their advisor, the average response was 27.40, significantly shaded toward crediting themselves. Older DC participants - those over the age of 65 - were more likely to give credit to their advisor, with a sliding scale total of 41.12, but the youngest DC participants (under 36) rated themselves the credit at 24.90.
Males are more likely to attribute their financial success to themselves (25.63 to 29.21). In general, those with higher DC plan balances are more likely to attribute their financial success to their advisor. For instance, those with a balance over $100,000 rate their financial success attribution at 28.69 while those with less than $10,000 in their balance put the sliding scale more in their own favor at 22.52.
Overall, plan participants control 65 percent of their assets by themselves with no input from financial advisors. Nineteen percent of assets are handled with the assistance of an advisor, while 16 percent are turned over entirely to a professional for handling.
Age is again a factor in this, as only 58 percent of assets of those over 65 are handled completely by the investor himself, and 29 percent of assets for the oldest age group are handled in conjunction with financial advisor assistance.
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