Cerulli: 46% of 401(k) participants want anytime withdrawals, 40% a personalized retirement plan

Forty-six percent of participants in workplace retirement plans want to withdraw money at any time, according to a Cerulli Associates report released this month and reported by Financial Planning. Another 31% want to be able to change the investments they are in. The report describes both as a desire for flexibility in how participants save and spend.

Forty percent want "a personalized, detailed, and actionable plan to follow in retirement," and 39% would like guaranteed monthly payments that would last after their savings are used up. Cerulli's read of those answers is that they describe more planning than participants tend to get under a workplace defined contribution plan, and the report says that gap suggests an opportunity for advisors to move these workers into a client pipeline.

"Most pre-retirees are uncomfortable making key retirement income decisions without an advisor's help," Chris Bailey, a director in Cerulli's Retirement practice, said in a statement. "As much as they want guaranteed income in retirement, pre-retirees also want a personalized, detailed plan they can follow in retirement." For an advisor, those are two separate asks: the income guarantee clients name, and the written-down plan they also want.

Cerulli's suggestion to plan sponsors is to offer a range of solutions rather than lean on individual products. "Recordkeepers and plan advisors have an opportunity to help participants develop retirement plans to utilize these products effectively," Bailey added in the statement. "Perhaps increased access to planning and advice will reduce the need for flexibility that intermediaries and participants seek."

For most wealth advisors, those plans are a small source of new clients. A separate recent Cerulli report found 3.5% of wealth advisors' new clients come from defined contribution plans the advisors work with; for defined contribution specialists, the share is 37%. Advisors told Cerulli they want more help from their home offices in converting plan participants into advisory clients, Financial Planning reported.

The 3.5% figure is the number to keep in mind when weighing whether to build out a retirement plan practice as a client acquisition channel. Bailey, speaking about last year's version of the defined contribution distribution report, told Financial Planning that assets in collective investment trusts rose 25%, and have grown by roughly 20% a year since 2019 with 2022 the exception.