Mercer Survey Reveals 401(k) Participants Who Use In-Plan Advice Have More Positive Retirement Outlooks

  Mercer Survey Reveals 401(k) Participants Who Use In-Plan Advice Have More
  Positive Retirement Outlooks

  *But plan sponsors need to focus on engaging more lower-paid employees with
    these valuable resources

Business Wire

NORWOOD, Mass. -- March 28, 2013

Employees who say they use advisory services offered to them in their 401(k)
plan have a distinctly more positive outlook about their future retirement
versus those who do not, according to an analysis of data from the recent
Mercer Workplace Survey  http://www.mercer.com/2012-mws-summary. Nearly
one-fifth (18%) of survey respondents say they engage with an online or
in-person advisory service in their 401(k) plan. Although a relatively small
percentage of the base, these participants are much more likely to feel that
they will have enough money for retirement, can live as well or better than
when working and will not have to delay retirement (See Figure 1).

Figure 1: Expectations in Retirement: which of these statements below do you
expect will be true for you in retirement?

                                                   
                                                             Those who engaged
                                    All             with in-
                                         respondents         plan advice in
                                                             the past year
I will have enough money to pay      35%             49%
for health care
I will live as well or better as     29%             40%
I did when I was working
I will be able to help out
younger family members with          15%             26%
tuition or housing expenses
I will be able to leave money to     23%             33%
family members or charities
I will be in a position to           16%             24%
travel extensively
I will run out of money              21%             17%
I will have to reduce my             44%             34%
standard of living
I will consider delaying             44%             34%
retirement
I will work at least part time       52%             38%
in retirement
Source: Mercer Workplace Survey                     
                                                             

This year’s Mercer Workplace Survey also revealed that awareness and
availability of in-plan investment advice is high; in fact 79% of participants
said that their plan offers some type of advice (online, in-person/telephonic,
or both) up from 72% in 2011.

“This is great news for plan sponsors who offer advisory services in their
401(k) plan, as there is a clear correlation between positive retirement
sentiment and engagement with these services,” said Dave Tolve, Administration
Product Leader for Mercer. “Yet, with relatively low usage among participants
- especially when you start to look at the demographics - there is still work
to be done.”

Looking at the demographics of typical in-plan advice users compared to those
who do not use these services shows participants who are younger;
better-educated; and have higher incomes, balances and deferral rates.

“This profile of the typical in-plan advice user should give pause to plan
sponsors who want to communicate the high value that investment advice
services can provide,” said Suzanne Nolan, Administration Marketing and
Communications Leader for Mercer. “These are participants who may in fact need
this advice the least, given that they often have longer retirement savings
horizons, tend to utilize outside advisors and potentially have both more
financial and educational resources at their disposal. The true challenge for
a plan sponsor offering in-plan advice is to reach those on the lower end of
the income spectrum, where ‘every dollar counts’, and who may also have a
shorter timeframe in which to accomplish their retirement savings goals.”

About the Mercer Workplace Survey

The 2012 Mercer Workplace Survey (www.mercer.com/2012-mws-summary) tracks
employee attitudes toward, and experiences with, employer-sponsored
retirement, health and benefits programs. The survey represents a national
cross-section of active 401(k) participants, defined as those currently
contributing to a 401(k) plan irrespective of balance or having a 401(k)
balance of $1,000 or more with their current employer whether or not they are
currently contributing. Eligible non-participants and those only holding
balances at previous employers are not included in this research. Respondents
are also required to be enrolled in their employer’s health plan. Online
interviews were completed with 1,656 participants between June 6 and June 21,
2012. The survey’s margin of error is plus/minus 2.4%.

About Mercer

Mercer is a global consulting leader in talent, health, retirement and
investments. Mercer helps clients around the world advance the health, wealth
and performance of their most vital asset – their people. Mercer’s 20,000
employees are based in more than 40 countries. Mercer is a wholly owned
subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of
professional services companies offering clients advice and solutions in the
areas of risk, strategy and human capital. With 53,000 employees worldwide and
annual revenue exceeding $11 billion, Marsh & McLennan Companies is also the
parent company of Marsh, a global leader in insurance broking and risk
management; Guy Carpenter, a global leader in providing risk and reinsurance
intermediary services; and Oliver Wyman, a global leader in management
consulting. For more information, visit www.mercer.com. Follow Mercer on
Twitter @MercerInsights.

Contact:

Mercer
Bruce Lee, +1 212-345-0553
bruce.lee@mercer.com
 
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