Where do you go for 401(k) Advice?

For overworked, under-saved Americans, free, personalized investing advice at work may sound like a great opportunity. But when representatives from the retirement plan come to Mark Patterson’s office, the 59-year-old Nashville lawyer usually skips the sessions. “Those representatives, they’re not financial planners,” Patterson says, adding that the advice they give is often “fairly basic.”

In corporate conference rooms across the country, companies that are trying to help employees plan their future are facing an odd problem: They don’t seem to want the help. Faced with mounting concern that a generation of retirees simply won’t have enough saved, firms big and small have started offering financial advice to employees through their retirement plans. But by nearly everyone’s admission, few workers ever attend a seminar or log in to a retirement help site, even though a majority say they would use advice like that if they could.

What’s the disconnect? Company-sponsored investing advice isn’t all it’s cracked up to be, and it’s often not delivered in a very appealing or accessible way. PowerPoint presentations, scripts and investment jargon are the norms at workplace seminars, and online sites often ignore outside investments and may feel impersonal. And while it’s clear that providing any kind of advice increases participation, savings rates and diversification, it’s not clear what type of advice is most effective.

Some plans offer online tools that calculate retirement income or tell participants whether their portfolios need more diversification. Some offer personal, face-to-face sessions with a plan representative who can talk generally about the importance of diversification and show examples of model well-balanced portfolios. In some cases, that representative will use a computer model to come up with specific recommendations for which funds an individual should buy. Others make vague recommendations and talk more generally about asset allocation.

Schwab’s survey found that 51% of investors say they prefer one-on-one meetings to online tools.

For the 10% who use the advice, it does help, experts say. Almost half of investors who’ve designed their own portfolios have less than 10%, or more than 90%, of their money in stock. Schwab’s survey found that getting advice made workers save more, diversify their investments, and stay the course through the market crash – and rally.

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