In Midst Of National Discussion Around Retirement Savings Rollovers, The American College Releases New Research Examining The Real Behavior Of Consumers Facing This Critical Decision

BRYN MAWR, Pa., March 14, 2016 /PRNewswire-USNewswire/ -- As the national dialogue around retirement plan rollovers and the proposed Department of Labor rules continues, The Center for Retirement Income at The American College of Financial Services today released the findings of a comprehensive new survey that explores the actual behavior of individuals when facing the rollover decision.

The study finds that the majority (62%) of recent retirees with substantial assets in a defined contribution plan at retirement chose to move their assets out of the plan. More than eight in ten did so with the help of an advisor.  This compares to the 38% who left money in the plan, with only about half (56%) reporting that they have an advisor.

The survey, which explored how—and how well—individuals make decisions about what to do with their money, reported that the main reason why retirees rolled over their assets was the probability of improving performance (70%), followed by consolidating assets (68%).  For those who kept money in the plan, over two-thirds (65%) cited liking the investment options.  Interestingly, almost half of this group took a more passive approach, reporting that it was easier to leave things the way they are.

"The good news here is that the retirement income message is breaking through," said David Littell, Co-Director of The American College's Center for Retirement Income.  "The vast majority of consumers we surveyed recognized the importance of the rollover decision and were careful with their decision making.  However, there was evidence that those that left their money in the plan were less likely to be concerned about the rollover decision, work with an advisor, or create a comprehensive plan.  So clearly there's much more work to be done – and it starts with the financial planning experts on the front lines of educating and guiding retirees."  

More Comprehensive Planning

The survey found that those who rolled money over with the help of an advisor were more likely to have a comprehensive retirement plan (89%, compared with 71% who rolled over without the help of an advisor).  Furthermore, their financial plans were comprehensive, reflecting retirement income planning strategies.  Recent retirees with a financial plan report their plan contains an estimate of the amount of income they will receive each year in retirement (95%), a plan for where their income will come from each year in retirement (93%), and an estimate of how long their income will need to last in retirement (93%).  Those who work with advisors are somewhat more likely than those who do not to say that their plan includes targets for how their assets will change over each year (73% vs. 61%). Respondents reported that advisors were less likely to include how to pay for long term care (59%) and legacy planning (55%) in their comprehensive plan.

Retirees also identified another benefit of working with an advisor.  Eight in ten (80%) agreed that advisors are helpful because they can review the retiree's financial planning and point out things they have missed.

Need Help with Investment Decisions 

The one area of concern reported by retirees related to the investment of assets.  Just one-third (34%) feel extremely or very knowledgeable about investing and investments and only 43% of respondents feel extremely or very confident about making decisions about savings and investments on their own without an advisor.  

Methodology

The questionnaire for this study was designed by The American College of Financial Services along with Greenwald & Associates.  Respondents were asked questions regarding their decision about what to do with the money in their retirement plan when they left full-time employment. Additionally, a series of demographic questions was asked.

Information for this study was gathered through 15-minute online interviews conducted between October 8-26, 2015.  Respondents were recruited through the Research Now online panel, and a total of 1,002 Americans were interviewed.  To qualify for participation in the study, respondents had to be at least 60 years old, retired from full-time employment within the past three years, and have had at least $75,000 invested in their former employer's 401(k) or 403(b) plan at the time of their retirement.

About The American College of Financial Services
The American College is the nation's largest non-profit educational institution devoted to financial services.  Holding the highest level of academic accreditation, The College has served as a valued business partner to banks, brokerage firms, insurance companies and others since 1927.  The American College's faculty represents some of the financial services industry's foremost thought leaders.  For more information, visit TheAmericanCollege.edu.

About the New York Life Center for Retirement Income at The American College
The New York Life Center for Retirement Income at The American College serves to elevate the knowledge of financial service professionals in order to improve retirement security for Americans. It provides a website for advisors and supports the Retirement Income Certified Professional® (RICP®) designation, which educates financial advisors to help prepare the 76 million Baby Boomers and millions of older retirees who are concerned about the safety of their retirement income plans. To learn more about the New York Life Center for Retirement Income, go to http://retirement.theamericancollege.edu.

SOURCE The American College of Financial Services

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http://TheAmericanCollege.edu