Pontera 401(k) Survey: Advisors Significantly Boost the Financial Knowledge and Confidence of America's Retirement Savers

More than eight in 10 U.S. workers feel more confident about their future in retirement when they have the support of a financial advisor

NEW YORK, Oct. 30, 2024 /PRNewswire/ -- Millions of Americans are staking their retirement futures on their 401(k)s, yet many struggle to navigate the maze of investment options, fees and financial decisions. That is, unless they have a financial advisor. According to the first-ever Pontera 401(k) Literacy Survey, plan participants who work with a financial professional are more confident about their future in retirement, better informed about their plans and contribute more to their accounts.

A nationwide survey of  2,010 workplace retirement plan participants from 50 states who are employed full-time found that eight in 10 advised participants – and 100% of Baby Boomers – enjoy greater peace of mind and confidence. These participants are also more engaged with their plans than un-advised workers and more likely to maximize their annual contributions. Other key findings include:

• 90% of advised respondents believe their 401(k) allocations are aligned with their overall financial plan, versus 75% of non-advised respondents.
• 66% of advised participants contribute the maximum to their workplace account, compared to 40% among non-advised.
• Advised participants on average say they contribute 15% of their income to their workplace account, compared with 10% for non-advised participants.

"Our survey reinforces what we have long proclaimed: Advisors help retirement savers achieve better outcomes," said Yoav Zurel, Co-founder and Chief Executive of Pontera. "The volume and complexity of information that must be absorbed can be overwhelming, so it's encouraging to see that participants are more confident and invested in their 401(k)s when they have an advisor to educate and guide them."

Pontera, the fintech company on a mission to help Americans retire better, set out to identify the difficulties U.S. workers face when managing their employer-sponsored 401(k), 457(b) and 403(b) plans. By design, half of the respondents employ a financial professional while half do not, enabling Pontera to compare knowledge and sentiment of the respective groups and determine if advisors have an impact on clients with workplace plans.

The employer-sponsored 401(k) has become the largest source of retirement security for most Americans, with Social Security's uncertain outlook and only 15% of private sector workers having access to defined-benefit pensions. More than 85 million U.S. workers have a workplace retirement account, while the median family holds 45% of their net worth in retirement savings.

Pontera's survey confirmed 81% of retirement savers consider their 401(k) the most critical part of their retirement savings plan, compared with 67% for traditional IRAs and 61% for both Roth IRAs and annuities. Americans say there are many reasons they participate in workplace-sponsored plans, the most important being employers' matching contributions, automatic payroll deductions, the benefits of investing pre-tax dollars and tax-deferred growth.

Knowledge gap

Still, there are significant knowledge gaps that get in the way of participants making the most of their retirement accounts. In the survey, eight in 10 respondents report they experience at least one challenge managing their workplace plan. Likewise,  87% have at least one challenge when selecting investments, a number that rises to 92% among Gen Z respondents. Other findings include:

• 74% would welcome professional help managing their accounts, while 77% say they'd be willing to pay for advice.
• 59% say they have had doubts about their 401(k) investment decisions.
• 50% say they are confused about understanding their plan options.

Overall, Pontera found a significant number of 401(k) participants struggle to fully understand their plan offerings. As part of the survey, Pontera gave respondents a nine-question "401(k) Literacy Quiz" designed to gauge their knowledge of retirement plan features and rules.

The survey revealed Americans may overestimate their fluency when it comes to workplace retirement accounts. While six out of ten 401(k) participants consider themselves "highly financially literate," 85% were unable to correctly answer all the questions while 46% of respondents scored "C" or lower.

Notably, 74% didn't know at what age catch-up contributions can begin. Many also were not aware they would need to pay a tax on early withdrawals. Nearly a third of 401(k) participants couldn't recall how much they pay in plan fees.

"Financial literacy is a major issue for our society when individuals are responsible for saving for their retirement," Zurel said. "These knowledge gaps highlight a critical need for finding additional ways to support and educate retirement savers. We believe financial advisors are in a great position to deliver that help."

The Value of Advisors

Fortunately, the overall picture is much brighter for participants who work with a financial professional. Pontera's survey, and its unique side-by-side comparison, shows 401(k) engagement and confidence in a secure retirement soars when participants are empowered by personalized support.

Advisors have a positive impact on clients' 401(k) accounts in many ways:

• 81% of advised respondents know how much they pay in plan fees, versus 62% of non-advised respondents.
• Advised clients are more likely to know catch-ups can begin after age 50.
• 51% of Americans with advisors check their balance and contributions at least weekly, versus 34% of Americans without advisors.
• 48% of advised participants monitor portfolio performance, compared with 32% of un-advised.

Having an advisor, the survey shows, helps workers navigate retirement plan complexities, including helping participants assess risk tolerance, evaluate the tax implications and allocate assets in line with their comprehensive plan. They also help their clients better understand fees, contributions, and investment performance.

"It's abundantly clear that enabling personalized, in-plan 401(k) advice from their trusted advisor is an important solution to the challenges faced by many retirement savers," said David Goldman, Chief Business Officer, Pontera. "Personal guidance from a professional advisor can bridge the 401(k) literacy gap, provide retirement savers with greater peace of mind and help better prepare them for retirement."

Founded in 2012, Pontera is a fintech company that enables retirement savers to receive personalized 401(k) account management from their trusted financial professional through its secure, client-permissioned platform. Certified under SOC 2 Type II and ISO 27001 standards, Pontera's enterprise-grade data security empowers advisors to view, analyze and rebalance their clients' accounts, keeps clients' financial information secure and ensures advisors cannot make other account changes.

For a deeper dive into the research, download a copy of the 2024 Pontera 401(k) Literacy Survey at info.pontera.com/survey. To learn more about Pontera, please visit pontera.com and follow us on LinkedIn, Twitter and Facebook.

About the Survey
This survey was conducted by The Harris Poll on behalf of Pontera from July 11 to July 15, 2024. All 2,010 respondents, based in the United States, are ages 18 and older, are employed full-time, and have an employer-sponsored 401(k), 403(b), or 457(b) retirement savings account. Respondents surveyed are from all 50 U.S. states. This survey was designed to include 50% of respondents who currently work with a financial professional and 50% without an advisor.

About Pontera
Pontera is a fintech company on a mission to help millions of Americans achieve greater wealth for a more comfortable retirement by enabling financial advisors to view, analyze, and manage their 401(k)s, 403(b)s, and other workplace-sponsored accounts. Our secure, purpose-built platform, seamlessly integrated with advisors' portfolio management tools, is designed to work across many account types and help advisors deliver comprehensive investment management and improve financial outcomes. Founded in 2012, Pontera is headquartered in New York, N.Y. Learn more at www.pontera.com.

About The Harris Poll
The Harris Poll is one of the longest-running surveys in the U.S., tracking public opinion, motivations and social sentiment since 1963, and is now part of Harris Insights & Analytics, a global consulting and market research firm that delivers social intelligence for transformational times. We work with clients in three primary areas: building 21st-century corporate reputation, crafting brand strategy and performance tracking, and earning organic media through public relations research. Our mission is to provide insights and guidance to help leaders make the best decisions possible. To learn more, please visit www.theharrispoll.com

SOURCE Pontera