Other than compensation and promotions, retirement benefits were the greatest factor keeping financially secure employees loyal to their employers, according to the second quarter 2010 Merrill Lynch Affluent Insights Quarterly, a survey of the values, financial priorities and concerns of affluent Americans.
The survey was fielded from June 11-29, 2010, among a nationally representative sample of U.S. workers with investable assets in excess of $250,000.
Employer-sponsored retirement vehicles were cited as a top reason for company loyalty by 60 percent of respondents, significantly more than those who cited having a good boss (45 percent), a convenient commute (31 percent) or the option of flex time (30 percent). These employees also cited health care benefits (58 percent) and simply enjoying what they do (also 58 percent) among top reasons for staying with their employer.
"In today's world of high unemployment, it's easy to forget that America's long-term challenge will more likely be too few workers, not too few jobs," said Andy Sieg, head of retirement and philanthropic services for Bank of America Merrill Lynch. "As Baby Boomers begin to exit the workforce, employers will face an intensifying war for talent for which a new wave of innovation and creativity in the delivery of retirement and other benefits will be among the keys to winning. We already see some of the most dynamic employers enhancing their benefit offerings to further their competitive edge when attracting and retaining talent."
For the majority of respondents, workplace retirement vehicles such as 401(k) plans are among the primary tools in which they save and invest for their future. According to the survey, more than half (54 percent) rely solely or heavily on retirement plans offered by their employers to meet retirement goals. However, even among these affluent employees, 60 percent do not contribute the maximum allotted amount to their workplace retirement accounts, inviting greater potential for retirement funding shortfalls and a need to retire later than they may have hoped. In fact, 45 percent of affluent individuals said they expect to retire later than they originally planned.
Wanted: Advice and Guidance
Survey respondents indicated that more could be done by their employer to help them save for retirement, such as by providing:
• Access to a financial professional who can offer personalized advice and guidance (cited by 26 percent).
• Better financial education programs about how to save for retirement (24 percent).
• Education and advice about issues beyond retirement savings, such as budgeting, college savings plans and debt management (21 percent).
Among affluent employees with access to financial education or advice services offered by their employer—particularly pertaining to their 401(k) or other workplace retirement plans—77 percent take advantage of such value-added benefits.
Among those who work with a financial adviser in or outside the workplace, the majority indicated that this person plays an important role in determining how to help them make the most of their 401(k) or other workplace retirement plan. The two-thirds (66 percent) of respondents who turn to their financial adviser for help in this way cited doing so for reasons such as:
• Establishing the right asset allocation strategy within their plans (33 percent).
• Adjusting this strategy at different life stages (26 percent).
• Assisting with rollover on leaving an employer (18 percent).
• Developing rollover or distribution strategies when preparing for retirement (20 percent).
"In addition to the growing use of automatic enrollment and automatic increase features within 401(k) plans, companies are increasingly offering employees greater access to meaningful financial tools with advice and guidance, across multiple channels and from the earliest stages of their careers through their transition into retirement. We see the most successful retirement plans being those easiest for employees to understand and engage in transactions," said Kevin Crain, head of institutional client relationships for Bank of America Merrill Lynch.
Minding Their Money—at Work
Putting enough aside for retirement can be difficult and stressful, even for those with investable assets in excess of $250,000. According to the Merrill Lynch Affluent Insights Quarterly survey, 20 percent of these employees said stress about personal finances had caused them to be less productive on the job, contributing to their lack of focus, missing days of work, and treating or responding to co-workers in a negative manner.
When asked to consider the amount of time they spent managing their personal finances (e.g., portfolio management, investment research, paying bills, transferring funds, talking to a financial adviser), nearly one in five respondents (17 percent) said they spent 50 percent or more of the time given to these tasks while in the workplace, and nearly one in three (29 percent) spent at least 25 percent or more of this time while at work, according to the survey.
Stephen Miller is an online editor/manager for SHRM.
Most Big Employers Auto Enroll, Restore 401(k) Match, SHRM Online Benefits Discipline, July 2010
Plan Participants Confused About Retirement Fundamentals, SHRM Online Benefits Discipline, July 2010
Employers Reluctant to Enhance Retirement Benefits, SHRM Online Benefits Discipline, May 2010
Employer Interest in Retirement Plan Education Growing, Washington Post, August 2010
SHRM Online Benefits Discipline