With the majority of mass-affluent 401(k) participants not working with a financial advisor, a new report from Cerulli finds recordkeepers have an opportunity step in and play a larger role in guiding participant decisions.
“There is an opportunity for recordkeepers to establish themselves as a trusted advisor throughout the accumulation phase in order to retain and win assets.”
Cerulli’s Elizabeth Chiffer
According to The Cerulli Report—U.S. Retirement End-Investor 2025, recordkeepers should do more to engage with participants by providing prescriptive and actionable recommendations to improve retirement readiness and build relationships.
The report found the majority (63%) of active 401(k) participants, many of whom fall into the mass-affluent category, do not have a financial advisor. Many of these participants would like to hire an advisor in the future. Meanwhile, 52% of mass-affluent active 401(k) participants who do not work with an advisor say their retirement savings account provider is their primary source of retirement planning and financial advice.
“There is an opportunity for recordkeepers to establish themselves as a trusted advisor throughout the accumulation phase in order to retain and win assets,” said Elizabeth Chiffer, research analyst at Cerulli. “Recordkeepers should guide participants to help them determine their optimal retirement savings goal, target retirement date, or overall vision for their life in retirement.”
She added that developing personalized prompts for participants to reassess their goal, track progress on their goal, and update their information, at least annually, drives engagement and provides a basis of conversation with the participant. “Additionally, they can also take lessons from employee benefit enrollment to guide participants toward active decision-making on an annual basis.”
401(k) participants often find retirement planning confusing and challenging. For instance, fewer than 30% of active 401(k) participants are very confident in their ability to make future decisions about decumulation and the tax implications of distributions without the help of an advisor.
Participants look for advice so that they can share the responsibility for their retirement readiness and financial planning with a professional who can guide them through the planning process and assist with difficult decisions.
In a press release, Cerulli noted it recognizes that offering advice to participants presents notable challenges for recordkeepers. While that may be the ideal, there are novel solutions with less burdensome investment that recordkeepers, advisors, and plan sponsors should consider, including: repositioning the 401(k) as a means to access financial planning, engaging with participants when they are considering their other benefits, and helping participants document their retirement plan.
“This framing and the inclusion of in-plan advice solutions could help maximize participants’ use of the financial benefits offered to them and help providers retain assets and win future rollovers,” Chiffer said.
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Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.