If your plan sponsor clients want to attract and retain top millennial talent, they need to offer a 401k plan — period.
A study from Fisher Investments 401(k) Solutions found that 80 percent of millennials say they would prefer to work for a company that offers a 401k plan, dispelling a commonly-held belief that millennials are not as interested in 401k plans as other generations.
However, despite their high levels of interest, millennials also tend to be (understandably) less educated on the ins and outs of retirement planning, with the same percent (80) failing Fisher’s 401(k) IQ in the Workplace Quiz. That’s higher than the 70 percent of general respondents who earlier failed the same 401k financial education workplace quiz, missing at least three of the nine basic questions.
“We’re encouraged that the vast majority of millennials recognize that 401k plans can be indispensable to meeting their long-term savings goals,” Nathan Fisher, managing director and founder of Fisher Investments 401(k) Solutions, said in a statement. “However, when you get down to the nuts and bolts of planning, it becomes clear there’s an education gap. What’s interesting is the reliance and trust millennials place on advice from their immediate network instead of retirement providers.”
The Fisher study also found that millennials are more likely than other groups to receive and trust information about retirement planning from individual contacts, whether they be friends, relatives or co-workers, countering the view that younger savers are more reliant on internet-based information and advice.
In fact, nearly one in three millennials trust a friend or family member’s advice on retirement planning most. In keeping with their desire for individual attention, millennials are more likely than other age groups to wish their retirement provider would reach out to them personally, and to know more about their company’s 401k plans.
Millennials at small businesses (which Fisher defines as those with between 5 and 200 employees) tend to be less engaged in retirement planning, with nearly one in four saying they are not enrolled in a plan.
Those who are enrolled in a plan are also less likely to receive information from their 401k provider than their counterparts at larger companies, and, perhaps most troubling, they are less likely to trust the 401k plan offered by their employer.
The survey also found some stark differences between millennial women and men. Millennial women are much less confident in their ability to pick the right investments and save enough for retirement than their male peers. They are also less likely to be enrolled in their company’s 401k plan and more likely to fail the 401(k) IQ Quiz.
“This study really strikes at the heart of the assumptions many employers and planners have about the millennial generation,” Fisher continued. “While they are very technologically savvy, millennials are in fact the most likely generation to seek individual rather than web-based information about their retirement plans. We were also surprised to find that a significant gender gap continues to exist when it comes to investing and retirement planning, something that employers and 401k providers must address.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
I believe that Millennials are not as well educated about 401( k)’s is because they are young and retirement is a long way off. Additionally, if they are getting information from their peers who are also young that is why there is a lack of urgency. They are thinking about other financial issues that may seem more important like buying homes and automobiles, no different from Boomers at that age. Personal communication (yes, selling the concept of long term savings) is a more effective way to move them to action rather than the internet.