Defined contribution plan participants are concerned enough about their futures that they put money into their retirement accounts for a rainy day.
But they are also careful with their disposable income, which may be why they tend to avoid using advisors to help them with their investment decisions.
Spectrem’s newest study of DC plan participants, Financial Attitudes and Concerns of Retirement Plan Participants, looks at how participants lean in terms of risk tolerance, advisor usage and knowledge of finance and investments.
These are careful people for the most part, which is why 69 percent identify themselves as either moderate or conservative in terms of risk tolerance. Fifteen percent put themselves in the conservative group. Twenty-nine percent consider themselves aggressive and 2 percent put themselves in the most aggressive category.
(For more information from Financial Attitudes and Concerns of Retirement Plan Participants, click here).
Those percentages relate to the percentages of defined contribution plan participants when they rate their knowledge of finance and investments. Thirty-six percent say they are not very knowledgeable, and 9 percent say they are not at all knowledgeable. Forty-two percent consider themselves fairly knowledgeable, while 13 percent think they are at the top of the heap in terms of finance knowledge.
Whether it is because they don’t know enough to ask the correct questions, or they consider it an unneeded expense, plan participants are reticent to use financial advisors. Almost 60 percent consider themselves self-directed investors, who make their own investment decisions without the assistance of an advisor.
Another 30 percent are event-driven investors, using financial advisors only in the case of big issues like retirement planning. Only 12 percent of plan participants are active users of financial advisors, and only 5 percent consider themselves advisor dependent.
With all of their concerns, plan participants are optimistic about their investments and retirement accounts. Sixty-five percent say their financial situation is better today than it was one year ago, and 72 percent said they expect their financial situation to be even better one year from now.
Still, only 52 percent say they expect to have sufficient income to live comfortably during retirement.
To learn more about DC Participants, click here or contact Randy Wostratzky at firstname.lastname@example.org or 224-544-5195