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What Schwab's new 401(k) study tells about the demand for financial advisors to manage retirement assets

Automated advice is making a bigger dent but the personal touch is favored by a wide margin

Author Brooke Southall September 29, 2010 at 4:13 AM
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Catherine Golladay: People are more likely to engage in professional help if it is provided in a personalized one-on-one setting

401(k) Stories


Women of Wealth Management



September 29, 2010 — 6:07 PM

i’ll take professional, personal advice if it doesn’t come with only proprietary products, high expense fees and loads. does schwab offer such? if not, i would want a plan for a fee and find an alternative online route for investing my retirement dollars.

Kyle Hewlett

Kyle Hewlett

September 29, 2010 — 7:33 PM

My direct experience with delivery of 401k advice to participants over the last 6 years bears out the conclusions of the Schwab Study (bold face text is from Schwab Study).

“We’ve just seen an incredible uptick between January of 2008 and July of 2010… It’s a misperception that it’s only for the wealthy.” In 2006 www.401kfocusadvisor.com was delivering advice to 15 participants in 10 plans, and as of today we have 436 participants in 40 plans. We think that’s a pretty good uptick. The participant average 401k balance is $164, 024 according to our eZ-Adviser delivery system.

“The days of receiving a large enrollment brochure and being told to call a number and pick the funds you want are over,” We do “one-on-one” online reviews on a scheduled basis with our subscribing participants and in the last 6 months have averaged close to 1 referral for every 15 minute review we do. We augment this direct client contact with an average of 15-20 automatic electronic contacts annually. We have NO brochures.

“Sixty-five percent of survey respondents need some kind of motivation – such as from a one-on-one advisor — to use advice” Between our one-on-one reviews and our electronic email touches, our eZ-Adviser delivery system tells us that in half of the plans we advise our subscribers have logged in within 5 days of receiving our automatic alert over 70% of the time to see our asset allocation advice.

Yes, it’s a niche market and requires a different set of skills and an efficient delivery system but we’re gleaning .8 referrals per review, a client retention rate of 97% (436 clients), over $51 million in retirement assets, and $4 million a year in rollovers

Kyle Hewlett

Kyle Hewlett

September 29, 2010 — 8:01 PM

I forgot this added info. A plan in our area (1,500 participants) conducted a study in August 2008 to all participants (even the 11% not participating) and one of their findings seems to corroborate the Schwab Study. They found the following about participants:

“One in five uses a personal financial adviser; of these, about 2/3 of financial advisors provide advice on 401k plans. The plan participant who has a financial advisor is more likely than the advisor to initiate contact related to the member’s 401k plan. Less than half say their financial advisor routinely contacts them more than once a year.”

That appears to be 13% (20% times 2/3) are provided advice from their financial adviser and less than half of those get routine contacts more than once a year. It also appears that 87% get no advice.

If you have questions about our delivery system you can get more info at: www.ez-adviser.com

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