Plan Participants Lose Confidence in Investment Strategies

Plan participants are steadily losing confidence in their strategy for investing their retirement plan assets, especially those participants in the Baby Boom generation.

A Spectrem research survey from May 2007 reported that only 31% of plan participants felt they had a well defined strategy for investing their retirement plan money, compared to a past Spectrem Group research which showed confidence had was at 43% in January of 2006. It has been steadily falling since then and was 39% in January of 2007, and 36% in March of this year.

Spectrem research finds a relationship between the size of a participant’s account balance and their level of confidence in their retirement investment strategy. Participants with under $10K invested were least confident in their retirement investing approach (21%) whereas those with $50-$99K and over $100K were significantly more secure (43% and 45%) about their retirement investment strategy.

It might be easy to assume that younger participants, who have been in the work force for a shorter period of time, and who have less money invested, would be more confident. They can look down the road at the years ahead of them and feel as though they have all the time in the world and, logically, 36% of under 35 participants surveyed felt secure. However, the 35-49 age group surveyed at 28%, notably lower than their younger counterparts.

Plan administrators need to reach out to the Boomers and assess their needs. The loss of confidence this group is experiencing is reversible with the simple plan outlined above and that will allow advisers to take advantage of the hefty financial power that this age group wields.