I noticed an article the other day in Financial Advisor magazine that discussed a study that was completed by Schwab Retirement Plan Services. The main thrust of the study was how more employers were encouraging 401k plan participation. More employers are providing matching funds, for example, and many employers have instituted automatic enrollment and automatic savings increases. These are all important, as we’ve discussed chronic under-saving here for a long time. All of these things together can go a long way toward a client’s successful retirement.
What really jumped out at me, though, was the following nugget buried in the text:
Schwab data also indicates that employees who use independent professional advice services inside their 401(k) plan have tended to save twice as much, were better diversified and stuck to their long-term plan, even in the most volatile market environments.
Wow! That really speaks to the value of a good professional advisor! It hits all of the bases for retirement success.
- boost your savings rate,
- construct a portfolio that is appropriately diversified by asset class and strategy, and
- stay the course.
If investors were easily able to do this on their own, there wouldn’t be any difference between self-directed accounts and accounts associated with a professional advisor. But there is a big difference—and it points out what a positive impact a good advisor can have on clients’ financial outcomes.