401(k) Trends: What Participants Are Prioritizing in 2023 (Part 2)

Welcome to the second part of this Capital Conversations series, where we continue our discussion on the findings from our recent 401(k) plan participant survey. In the first part, we explored some intriguing shifts in participants' financial priorities and their readiness to adapt to new stages in life. If you missed it, you can watch it on YouTube or listen to it on Spotify.

Click Here to Download Our 2023 Annual 401(k) Participant Survey

In this second part of our series, we're diving into the next three intriguing insights from our survey, including how they see a financial advisor's role in their retirement planning.

For recent investment news and our take on the current market, retirement planning, and investment, listen to our podcast Capital Conversations or view our recent blog posts. Below is the transcript of the second part of our current Capital Conversation podcast series, "401(k) Trends: What Participants Are Prioritizing in 2023."

Alexia Keil: Welcome to the second part of Capital Conversations, where we are discussing the recent participant survey results. If you didn't catch the first session, feel free to pause, [watch] the first video, return to this one, and you're all caught up, ready to go from there. My name's Alexia Keil. I am the Relationship Manager for the retirement plans at Correct Capital, and this is Mr. John Biedenstein.

John Biedenstein: Hello, everyone. Hope you're having a wonderful day when you're watching this.

Alexia Keil: We're on number four, the next stage. So it was a little interesting – we had this conversation, John – about how from the 2021 and 2022 surveys, the most popular response to the next stages in your life was building a retirement estate. This year it was preparing for retirement. So you went from building to preparing. Did you find that interesting as well?

John Biedenstein: I find that interesting, but I think it goes along with a lot of things that we talk about emphasizing planning. So, building your nest egg and now you're planning more. I think people are actually listening to what we're talking about.

Alexia Keil: I was just gonna say, does that mean they're actually paying attention?

John Biedenstein: Maybe so, maybe so.

Alexia Keil: We're educating them about... The next one, and you can take that one.

John Biedenstein: Number five was a change where we saw more respondents looking for an advisor's help over the next 12 months. That climbed nearly to 30% – [up from] 27% from last year and 19% from 2021.

So a lot of what we do – whether it's in person education meetings or whether it's virtual education meetings – our team always stresses to take advantage of the help that we can provide. And that might be reviewing your account to determine if you're contributing enough. That might be looking at your investments (which candidly goes into the next topic, but we're not there yet). So, taking an advisor up on looking at your account or reviewing things is really something that – a lot of our 401(k) participants, the fees are paid by the plan sponsor. So you look at it and say, you know what, why shouldn't I take advantage of it? It's free!

Alexia Keil: Right! It's included. It's an additional benefit. I have always wondered why individuals do not take advantage of that benefit. Where else are you gonna get it?

John Biedenstein: And candidly, both of us have worked in the retirement plan space for a very long time, and we've had conversations with participants. So in a lot of cases, I will tell you, quite often, I get asked a question that I've never been asked before. But more times than not, there's questions that I have been asked before, so you can give some direction to say, “What's your perspective on this, on that?” What's your thoughts?

Alexia Keil: I completely agree with you. I don't know how I would say it better myself, actually.

Number six and the final question in regards to comfort levels. So 24% of respondents are “absolutely not” comfortable choosing their own investments, while 75% of respondents answer “mutual” or below.

As John has said previously, we've both been in this business for a long time and we remember when target dates weren't even an option. Everybody had to go in and choose their own investment options and diversify. Now you have a lot of different options, including target dates that are diversified investment fund-to-funds that work for you as well as model portfolios.

John Biedenstein: The first 401(k) I participated in had a bond fund, had a stock fund, and – it was actually a publicly traded company – and the third fund was investing in the company stock. That was all the offerings that were available. So now there's a plethora, there's too many choices available for folks. So it is confusing. I can understand where people say they're absolutely not [comfortable] because they're confused with the information that's in front of them.

But we do make it easier, I think.

Alexia Keil: A lot easier.

John Biedenstein: Number one, the default is typically what you already mentioned:

Alexia Keil: Target date funds.

John Biedenstein: Target date funds. For folks that don't know what those are, target date funds are tailored based on when you're expecting retirement. Oftentimes that’s calculating that at age 65, even though your social security might be 67 and something. It's really targeting folks based on when they're going to be eligible for full social security benefits.

The second choice we often provide participants is modeling or models available through the plan. Those might be investment choices available or those might be options that we can build for you, the individual.

And the third option is typically you do it yourself. Now that might mean you truly do it yourself. That oftentimes could mean – how many times have you met with an individual and they say, I work with Joe Schmoe at XYZ firm and I'd like Joe Schmoe to tell me how to invest this money. What do you tell him?

Alexia Keil: Great! We can do that.

John Biedenstein: Share this information with Joe Schmo and Joe can come back and make a recommendation to you in regards to that.

The big emphasis of this entire program is, surveys are valuable to you folks. Participants can get access to this via correctcap.com under 401(k) services*. You can get a copy of this participant survey emailed to you, and you can have full access to 1, 2, 3, 4, 5, and 6.

A lot of times we're making these available to the business owners, those interested parties that are helping the company run the retirement plan. Because these things can help you determine what's important and what we should be focusing on in the education side.

So, as you look at this as a participant, and if you have anything that might be of your interest and you want to chat with somebody, you can contact us through info@correctcap.com and we can email you or you can call us at 877-930-4015 and we'd be glad to help. So with that –

Alexia Keil: Thank you, John.

John Biedenstein: Thank you, Alexia, for sharing this time with me and going over this valued survey.

*Or download the 2023 401(k) participant survey here

Disclaimer: The opinions expressed in this program are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. As always, please remember, investing involves risk and possible loss of principal capital; please seek advice from a licensed professional.

Correct Capital Wealth Management is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Correct Capital Wealth Management and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Correct Capital Wealth Management unless a client service agreement is in place.

Capital Conversations by Correct Capital Wealth Management

At Correct Capital, we're here to assist you every step of the way. Whether you have questions about preparing for retirement, choosing investments, or seeking advice from our experienced team, don't hesitate to reach out to us. Speak to a financial advisor today by calling 877-930-4015 or filling out our online contact form.