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Why using an adviser pays off

By Jennie L. Phipps ·
Monday, August 25, 2014
Posted: 3 pm ET

Are you confused by the clutter surrounding your 401(k)? Is the complexity of your plan enough to keep you from putting more money into it?

Doubts and a lack of knowledge keep people from successful retirement planning, according to a recent survey by Natixis Global Asset Management:

  • About 56 percent of plan participants told Natixis that putting money in a 401(k) is a "pure gamble."
  • Some 48 percent say they would increase their contributions if they understood their plans better.
  • Thirty-five percent don't know where their money is being invested.
  • And 44 percent are overwhelmed by the choices in their 401(k) plan.

If these issues reflect how you feel about your retirement savings plan, Natixis says the solution is simple: Find an adviser who will help you understand and maximize your plan.

© Ljupco Smokovski/

One-third of baby boomers have less than $50,000 in their 401(k) plans, while 40 percent of millennials already have saved more than that, according to the survey.

Help you stay on track

One obvious benefit to having an adviser is increased 401(k) contribution rates, according to the survey. "Where a participant reports using a financial adviser, you see dramatic benefit," says Ed Farrington, executive vice president for retirement and business development at Natixis. "Contribution rates with an adviser average 9.5 percent. Without an adviser, they average only 7.8 percent."

An adviser also can help you understand why savings is worth the work and sacrifice, including "how much savings it will take for you to retire comfortably, and what longevity and inflation can do to  your savings over time," Farrington says.

Doing these calculations isn't simple, and neither is understanding the results. Most people don't even try, Farrington points out:

  • While 64 percent say their 401(k) has a retirement income calculator feature, 62 percent have never used it.
  • Some 53 percent say their plan lets them benchmark their progress toward a savings goal, but only 23 percent have given it a whirl.
  • And nearly 60 percent say their plan provides a dollar amount showing how much income they can expect in retirement based on their current savings level, but 63 percent haven't used that tool.

We're heading into the fall months -- the last chance to maximize your 401(k) contributions for 2014. It's also a good time to take stock of the rest of your financial situation while there is still time to take steps that will have a positive impact on your 2014 taxes.

This video offers good tips on choosing a financial adviser.

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