The public-sector advice gap is a confidence play

Public-sector workers are far less likely than private-sector employees to work with a financial professional, and the gap is wide enough that advisory firms should treat it as a business problem: among defined benefit plan participants, 46% of public-sector workers reported working with a financial professional, versus 70% in the private sector. The report, 'How to Help Retirement Plan Participants Make Optimal Financial Decisions,' co-authored by MissionSquare's Zhikun Liu and Gerald Young with Prudential Financial's David Blanchett, traces the gap to a confidence problem.

Among defined contribution participants, public-sector workers are 10.9 percentage points more likely to trust family and friends as a source of financial advice and 8.9 percentage points less likely to trust a professional adviser or planner, and at enrollment just 23% of public-sector workers with only a DC plan chose their own investments, versus 31% of private-sector workers. For workers with both DC and DB plans, the divide was 34% to 41%.

Liu told PLANADVISER that success with these participants may require 'not only providing information, but also building confidence' and helping them navigate complex financial decisions through their careers, and his list of practical fixes includes one-on-one consultations, retirement-readiness programs, direct connection with financial professionals, and guidance embedded into key participant touchpoints.

Read that list as a business-development plan for any practice serving public-sector employers, because these participants are rarely deciding which advisory firm to hire; they are deciding whether to use an adviser at all. Family and friends are the default source, which means the real competition is the conversation at the kitchen table, and a firm that wants in has to be more present than the family member—a demand favoring repeated, structured contact over an annual enrollment webinar.

The model is confidence-raising in practice: advisers who provide consultations and readiness programs are replacing a participant's habitual source of counsel with something better, slower than an email blast but a decision that tends to stick once trust arrives. The metric that matters is whether a participant leaves a conversation feeling more capable than when they arrived, not how many clicked a registration link.