Past research from Empower has shown that engaged employees save more than those who aren’t engaged with their retirement plans.²

The present study builds on that research by analyzing the value and benefits of advice. The research compares workplace savers who did not take part in an advice session in 2023 with those who did take part in an advice session in 2023. The covered advice interactions include one-on-one sessions (virtual or in-person) with an Empower registered retirement plan adviser (RPA) or through a phone consultation with an Empower registered representative. Throughout the study we interchangeably use the terms session or interaction to describe the one-on-one advice meetings or calls just described.

The analysis explores a variety of retirement planning metrics as of December 31, 2023, for more than 4.1 million retirement plan savers whose plans are managed by Empower. The population base is composed of public sector, Taft-Hartley, and not-for-profit participants (active and not-active). Additional insights are drawn from interviews with six Empower RPAs, each of whom meets with more than 600 workplace savers annually.

The research finds that workplace savers who have taken advantage of advice interactions available through their plans are significantly better prepared for retirement than those who haven’t. The significant proportion of advice users taking positive actions — such as increasing their savings rates — following advice sessions also demonstrates the value of advice. Actions taken also indicate that advice sessions are inclusive of individuals at different stages of their financial journey.

Key findings: Advice is improving retirement plan savers’ retirement readiness

Perhaps less quantifiable is the sense of relief that advice seekers express after a retirement planning session. According to the RPAs we spoke with, having a plan or a roadmap to get to retirement helps reduce financial anxiety and builds financial confidence for people.

What is advice?

For the purposes of this study, “advice” means an investment advice interaction (virtual or in person) with an Empower registered retirement plan advisor (RPA) or other Empower registered investment adviser. Advice sessions may cover topics like financial wellness, savings rates, investments, distributions, account consolidation, and retirement spending strategies. 

Advice sessions at Empower — whether they involve point-in-time recommendations or ongoing portfolio allocations through managed accounts — are given in the best interest of the participant. Advice is personalized and provides complete transparency regarding fees, alternative options, risks, and potential limitations.

Retirement plans provide access to advice

Empower research shows that less than half of Americans are using a financial advisor.⁴ The perception that advice services are too expensive and the belief among individuals that they don’t have sufficient assets to warrant advice are common reasons why people don’t use an advisor.⁵ Retirement plans can help overcome such obstacles and make financial advice available to all workplace savers regardless of age, gender, income, or assets. Tax-exempt employers and organizations, in particular, can prioritize providing access to an advisor by dedicating advisor time or specific individuals to meet with participants and members to deliver advice and education.

Making a difference: Advice by the numbers

The positive metrics associated with people having advice interactions aren’t solely due to advice sessions. Workplace savers may or may not be actively preparing for retirement at the time of an advice session, but such sessions are important drivers that contribute to better planning behavior and outcomes. More specifically, our research shows that diversification actions and increased retirement savings rates are common actions taken as a result of an advice session (see “Advice sessions drive positive actions” below).

Building a nest egg

Tax-exempt workplace savers who’ve had an advice session have an average account balance that’s almost two and a half times greater than those who haven’t had an advice interaction. The average deferral rate of advice seekers is 9.6%, almost 50% greater than for those who haven't sought out advice.

Getting workplace savers more involved

Empower defines engagement as at least one interaction with Empower’s workplace savings site and/or mobile apps, the Customer Care Center, or our advisory services over a 12-month period. Having an online account set up is a critical starting point for individuals to get involved with their retirement planning. Only 59% of savers who didn’t have an advice interaction in 2023 had an online account set up, 50% fewer than those who did have an advice interaction in 2023.

Furthermore, less than half of individuals who didn’t have a 2023 advice interaction are engaged with their retirement plans. Specific characteristics of people who took part in an advice session shows that almost double the percentage used their plan’s website or mobile app. Drilling down further, those who had an advice session logged in to the web or mobile app an average of 28 times in 2023. Higher usage levels point to a more proactive planning approach and can help improve the odds of workplace savers setting and meeting their goals.

Plan involvement

Diversifying savings

How workplace savers are investing can have significant impacts on outcomes. Empower breaks down workplace saver investment strategies by those using a professionally managed strategy — either managed accounts or target date funds — and those managing their own investments (do-it-yourselfers/DIYers). Individuals who have engaged in an advice session are well informed and more than twice as likely to have a managed account.

The goal is to match an individual’s investment strategy and risk tolerance with their retirement goals. Flagging extreme equity allocations (<0 equity or 100% equity) can help identify savers that could benefit from professionally managed strategies or point-in-time investment recommendations. Individuals who have advice sessions are less likely to have extreme equity allocations.

Holistic planning

Advice users are significantly more likely to take a more comprehensive planning approach than those not receiving advice. After receiving advice, such an individual is eight times more likely to use their retirement plan’s personal dashboard to aggregate their financial accounts and more than three times more likely to roll outside assets from other retirement plans into their current account. Account aggregation allows individuals to obtain a comprehensive view of their assets and liabilities and make informed financial decisions. Consolidating retirement plan assets can also provide a similar benefit.

Everybody can benefit from advice

Retirement plan savers are more concentrated in older generations and more likely to take part in advice sessions than younger savers.

RPAs encourage individuals to begin their retirement planning as early as possible, and they frequently attend enrollment benefit meetings for new hires to help increase awareness of available advisory services. However, they also confirm that a large proportion of people seeking advice are close to retirement or age 50 and older.

Gen Zers benefit as well

Retirement tends to be more on older workers’ minds due to its proximity. On the other hand, Gen Zers and millennials are likely more focused on lifestage concerns, such as paying off student loans or buying a first home. Despite having varying priorities and financial situations, however, people of all ages can benefit from financial advice.

Women and advice

Women are taking advantage of advice sessions in line with their overall plan representation relative to men. Also, women who take part in advice sessions have significantly better retirement metrics than women who don’t. RPAs also shared that women tend to view and approach retirement planning differently than men and underscored the importance of accounting for that fact — echoing Empower’s past research focused on women in government.⁷

No minimum income needed

People at all income levels can benefit from advice sessions. Yet, the greater the income levels, the greater the likelihood that a person sought advice in 2023. Workplace savers making more than $120,000 were almost twice as likely to get advice than their overall plan representation. On the other end of the spectrum, a smaller proportion of individuals making less than $60,000 had an advice session compared to their overall income segment’s representation.

Workplace savings advice is meant to help all participants regardless of income, age, or wealth. The good news is that savers who sought advice in 2023 are from all income levels, but there remains a large opportunity to encourage even more low earners and younger participants to take advantage of available services.

Advice sessions drive positive actions

So far we’ve shown strong correlations between workplace savers who engage in advice sessions and positive retirement planning behaviors. Our research further shows that workplace savers are also taking action on, and implementing, the advice they receive.

Actions taken by advice seekers may include point-in-time investment allocations, changes in investment strategies to professionally managed approaches, account roll-ins to consolidate assets, or deferral increases. Changes may also include less talked-about actions such as account registrations, which allow for greater plan communication and educational efforts, or the addition or updating of account beneficiaries.

Like the positive correlation between advice sessions and key retirement planning metrics, many positive trends are further reflected by individuals who take action following their advice sessions.

Strategies to promote advisor meetings

Given the positive actions taken by individuals who receive advice, it’s important to encourage workplace savers to take advantage of available advice sessions. RPAs we spoke with shared tips on what helps drive one-on-one advice sessions and how plan sponsors can help.

Tips on boosting advice sessions

• Group meetings: RPAs say they allocate approximately 20% of their meetings to group meetings during which they highlight the benefits and value of individual advice sessions. Group meetings, which are typically conducted in person, are important for generating individual meetings.
• Leaders set the example: RPAs hosting advice sessions with members of an organization's leadership allows those leaders to experience firsthand what such sessions entail. According to RPAs, participating leaders are greater champions of advice sessions and meaningful referral sources.
• Newsletter and email campaigns: Promoting advice sessions through newsletters and email campaigns increases awareness.
• Financial wellness incentives: Some organizations include advice sessions as an action step needed to qualify for an incentive program.
• Referrals: Along with referrals from members of leadership, referrals from colleagues who have been through an advice session represent a key channel to drive more appointments.
• One-on-one meetings: Conducting one-on-one advice sessions creates a buzz and word-of-mouth referral system that can engage other individuals.

Improving outcomes through advice

Advice, especially one-on-one interactions, provides individuals with personalized solutions that can inspire them to take control of their financial situations. Plan sponsors can help improve plan and workplace saver outcomes by:

• Offering advice as part of a plan’s design and turning on available services.
• Discussing all the ways advice can be delivered to their population.
• Going through the experience themselves to ensure they understand the service firsthand.
• Reviewing advice utilization and exploring creative ways to promote adoption.
• Working with retirement plan providers to encourage advice usage at younger ages.
• Leveraging advice resources to target underperforming metrics.
• Creating an open dialogue with plan advisors to better understand workplace savers’ needs.