Many Workers Lack Awareness of What’s in Their Retirement Account (and Want Help)

With inflation running rampant – year-on-year inflation sat at 8.5% in July – individuals have to invest. But according to a new survey from Principal Financial Group, that’s something most workers aren’t comfortable doing.

The survey, which looked at data from almost 700 U.S. residents, found that while a third of workers said they were comfortable making their own investments, more than half said they wanted someone else to make their investment decisions to help them reach their retirement goals. This creates a huge opportunity for plan sponsors and advisors.

In fact, almost one in three workers said they didn’t even know what their money was invested in, and the number one feeling reported by investors was “not confident,” according to the survey data.

While exact reasons for this discomfort varied, there were a few main concerns which united survey respondents, including worrying about not being able to keep up with inflation; fears of long periods of investment losses; and concerns they did not have anyone whose investment advice they could trust.

But while survey respondents didn’t trust themselves with their investments, they did have faith in their financial advisors. Three in five of those surveyed said they trust retirement plan providers with their money, and when individuals sought out investment assistance, their confidence in their investments increased by more than 85%. That suggests financial guidance and advising could be a path to confidence for more investors.

The research acknowledges that financial constraints can be a concern for those who don’t have access to free financial planning. But it also notes that many people, especially young people, may have access to free financial planning services through their employer. “This [financial planning assistance] combined with the plan’s qualified default investment alternatives (QDIA) and explaining QDIA benefits, could be valuable and easy ways for them to help build their retirement security – and their investment know-how and confidence,” the report says.