73% of 401(k) Savers Would Like Personalized Investment Advice

About three-quarters (73%) of 401(k) savers would like personalized investment advice for managing their workplace savings, according to an annual 401(k) participant survey by The Charles Schwab Corp. released Wednesday.

Among the 1,000 employed 401(k) plan participants surveyed by Schwab, nearly half (49%) said they were very confident in investment decisions with professional help, with a lower 27% expressing confidence in their own decisionmaking. About 39% of workers said they are already receiving professional advice through their plan at work.

Workers responded to several areas of need when it comes to receiving plan advice and guidance. The top five areas, as ranked by volume of response, were:

• Calculating how much money I need to save for retirement (41%)
• Receiving specific advice on how to invest my 401(k) (40%)
• Determining at what age I can afford to retire (38%)
• Figuring out how to create an income stream in retirement (36%)
• Figuring out what my expenses will be in retirement (34%)

Despite advancements in automated advice, including a trend toward artificial intelligence, most participants (95%) prefer to receive financial recommendations from humans, while 74% said they are OK with computer-generated recommendations, according to Schwab. About half of workers would feel comfortable asking AI tools, such as ChatGPT, for help with financial planning, though only 4% say they have already done so.

Schwab and other financial firms have been offering personalized advice and 401(k) management through managed accounts offered via retirement platforms for years. A recent report by consultancy Cerulli Associates notes that many adviser home offices are seeking to centralize the investment planning aspect to, in part, free up advisers to spend more one-on-one time with clients.

When it came to overall retirement planning, workers expressed more dismay over inflation and stock market volatility than they did in 2022, according to Schwab: 62% said inflation was an obstacle to retirement, as compared to 45% in 2022; 42% noted stock market volatility as a retirement stumbling block, as compared to 33% in 2022.

“When inflation persists for an extended period of time, workers are inevitably going to feel a deeper impact on their wallets,” Brian Bender, head of Schwab Workplace Financial Services, said in a statement. “While many workers are trying to cut back on spending, some costs are unavoidable and certain areas of their finances have taken a hit.”

Workers, who believe they will need to save an average of $1.8 million for retirement, are less confident they will achieve that goal compared to last year, with 37% believing they are very likely to achieve that target, down from 47% in 2022.

The 401(k) remains as crucial as ever in the mind of workers, with 88% calling it a “must-have” benefit, and three in four saying they would refuse a new job if it did not offer a defined contribution retirement plan. Workers are also counting on their 401(k) savings to deliver 40% of their retirement income, twice the expected 20% who plan to rely on Social Security.