PLANSPONSOR - November/December 2017 - 51

2017 PLANSPONSOR PARTICIPANT SURVEY
Hypothetical Trade-off Scenarios
Respondents were presented with two options for each of the following scenarios and selected their preference
57%
One-time
$5,000
bonus
61%
Guaranteed
3% annual
return
49%
accept " below average "
returns
Pay lower fees but
63%
Job with a company with
a 401(k) plan
but that pays 5% less
52%
Use of online advice
tools to invest
$10,000
43%
39%
One-time $5,000
contribution to your DC
account
37%
3% employer match that is
immediately
vested
Market-based return that
might greatly exceed 3%
but also could lose money
$250 per month reduction
in health insurance
52%
premiums
51%
Pay higher fees in hope
of receiving " above
average " returns
61%
One-time $10,000
contribution made to DC
account today
37%
Job with a firm
without a 401(k)
plan but that
pays 5% more
57%
Job with a firm with a
401(k) plan but that pays
10% less
48%
In-person meeting
with adviser
to invest $10,000
39%
Use of online advice
tools to invest
$100,000
63%
48%
6% employer
match vested
after 5 years
$250 per month increase
in employer contribution
to your 401(k) account
39%
Guaranteed lifetime of
tax-free monthly payments
= $200/mo. starting at
age 65
43%
Job with a firm
without a 401(k)
plan but that pays
10% more
Participant Trade-offs: What tips the scale in hard benefits decisions?
Present value. Historically, respondents have been somewhat
neutral when asked to choose between a one-time $5,000 bonus
and a one-time $5,000 contribution to their 401(k), but this year
57% preferred the bonus-up from 47% in 2016. The preference
was strongest, near 70%, among younger participants-those
23 through 39 years old. Among 40- through 59-year-olds, the
response was more mixed-approximately 50%-dropping to
32% for those 60 or older.
Immediate gratification. Respondents showed an equally
strong preference for immediate payouts vs. deferred annuities,
with 61% preferring a one-time, immediate $10,000 contribution
to their 401(k) over a guaranteed $200 a month payment
for life starting at age 65. While actuarial forecasts would assign
For full survey, see PLANSPONSOR.com/research
much greater value to the annuity as people approach 65, all age
groups-including participants over 60-preferred the immediate
contribution.
Size Matters. Investment advice comes in many forms, ranging
from online tools that offer personalized advice via home computer
to in-person meetings with an adviser. When asked whether
they would rather get advice online or in-person for a fictional
$10,000 account, 52% of respondents selected online advice. But
that number dropped to 39% for a fictional $100,000 account.
Household income and retirement savings also play a role, as those
with under $25,000 in household income or retirement savings
were almost twice as apt to choose help from a live adviser for their
fictional $10,000 or $100,000 account. -Brian O' Keefe
PLANSPONSOR.com November-December 2017 51
61%
In-person meeting
with adviser
to invest $100,000
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PLANSPONSOR - November/December 2017

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