Making a difference with advice in the workplace

Making a difference with advice in the workplace

Advice is at the heart of helping people pursue financial freedom and almost half (44%) of workplace savers wish they had gotten advice from a financial professional earlier.1 Sixty-one percent also feel like they should’ve started saving earlier.

Individuals face financial and planning decisions daily. They could be trying to figure out how to make ends meet, pay, or save for college, cover rent, support family members, or plan for a comfortable retirement. This can be time consuming, stressful, and frankly overwhelming for many.

One survey found that 56% of people spend more than 3 hours a week dealing with personal finances.2 Empower research also found that 1 in 5 Americans don’t feel their stress around money is manageable.3 And 4 in 10 don’t know where to go for financial advice.4 This speaks to the importance of providing workplace savers with advisory services to navigate these challenges. It also helps explain why 91% of workplace savers want and value access to unbiased advice through their retirement plan.

Getting past the aversion to ask for help

Asking for help isn’t something that’s hardwired into our DNA. A 2022 survey found that 73% of Americans don’t ask for help unless they absolutely need it and about 50% wait to ask for help until it starts to become too overwhelming.5 And when it comes to financial matters, it can be even more challenging to get people engaged.

Despite people’s reticence to get advice, 42% believe their need for financial help has increased over the past few years. Recent Empower research found that most workers with a retirement plan are concerned about macroeconomic factors and how they affect their daily lives and pocketbook.

Top 5 financial concerns cited by workplace savers

  • Inflation (90%)
  • Possibility of a recession (81%)
  • Rising interest rates and high prices (81%)
  • Healthcare costs (81%)
  • Market volatility (77%)

As the economy evolves, some concerns may subside – such as current worries about a recession – but other concerns will take their place. The key is for individuals to have integrated tools, support, resources, and advice available to help manage their finances across changing market environments.

Going back in time to get help

Between work, family, and personal obligations, dedicating time to focus on financial priorities may take a backseat for many. These missed opportunities could become sources of regret in the future.

We can’t go back in time, but with only 11% of workplace savers feeling like they’re saving enough, there’s an opportunity to empower individuals to take charge of their financial situations today. In the workplace, that means offering access to advisory services that matches how people prefer to receive advice and that are relevant to employees’ needs. It also means making it as easy as possible to access and obtain the needed education, guidance, and advice.

Seeking help near and far

Over the past year, workplace savers turned to a wide range of sources for financial advice. In fact, 47% of workplace savers prefer to receive advice from a combination of online sources and financial professionals rather than from just one source.6

Top sources used by workplace savers for financial advice over the past year include:

  • Online financial tools and resources (36%).
  • Retirement provider (34%).
  • Family (32%).
  • Financial advisor (30%).
  • Friends (25%).

Workplace savers also look to work colleagues, their employers, friends, and social media for help. Men are more likely to have used an advisor in the past year than women (35% vs. 24%), and Gen Zers are three times more likely to have turned to friends for advice than baby boomers. There’s also a subset of workplace savers (16%) that didn’t seek advice from any source. Extra effort may be needed to get these individuals more engaged with their planning.

Putting investment advice into practice

Workplace savers have a variety of options for investing their retirement plan assets. Approximately two-thirds of savers use professionally managed strategies – a combination of target date funds (TDFs) and managed accounts, and the remaining third utilize a do-it-yourself (DIY) approach.

TDFs and managed accounts both offer professional management for workplace savers. A key distinction from TDFs is that managed accounts (MA) offer savers the opportunity to personalize their strategy based on an individual’s unique financial situation, preferences, and goals. Engagement and savings rates are significantly higher for managed account users when compared to TDF users. We define engagement as at least one interaction with Empower’s workplace savings site, mobile apps, call center, or advisory services.

Chart showing engagement by investment strategy. 77% DIY, 81% MA, 59% TDF

 Getting help makes a difference

Advice and planning can help drive better results. People who are engaged with their retirement plan, leverage financial wellness tools and resources, seek out advice, and link accounts to create a more comprehensive view of their financial situation save more than people who are not engaged with their retirement plan. Workplace savers who utilize advice or financial wellness tools save 12% more than engaged workplace savers not using the same resources.

Chart showing savings rates by type of interaction. 5.6% not engaged, 8.2% Engaged, 9.2% Advice, 10.7% Aggregation - linking 2 or more accounts

Empower research has also found that workplace savers using a financial advisor are more confident when it comes to several financial metrics. They:

  • Feel more financially healthy and confident about their retirement readiness.
  • Are more likely to plan to retire early or as planned.
  • Consider themselves to be knowledgeable about investing.
  • Are more comfortable making investment decisions.

Ultimately, the goal is to get workplace savers involved with their financial and retirement planning and to have them consider the use of available advisory services to help meet their goals, needs, and preferences.

This article and supporting insights are based upon Empower’s study – Empowering America’s Financial JourneyTM – 2023, unless specifically noted.   

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1 Empowering America’s Financial Journey Survey of 2,511 working Americans between the ages of 18 and 70 with access to a defined contribution plan. The survey was conducted in August 2023.

2 2023 Employee Financial Wellness, Survey, PWC.

3 Empower, Financial Happiness, November 2023.

4 EBRI, 2023 Retirement Confidence Survey, April 2023.

5 StudyFinds, “Stubborn nation: 3 in 4 people don’t ask for help until they absolutely need it,” January 20, 2022.

6 Empowering America’s Financial Journey Survey of 2,511 working Americans between the ages of 18 and 70 with access to a defined contribution plan. The survey was conducted in August 2023.
 

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