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Immediate Release
July 11, 2002

401(k) Investors Go It Alone in Difficult and Rocky Financial Markets But Value Professional Financial Advice

Washington, DC - Despite prolonged volatility in the financial markets, most 401(k) investors go it alone, relying primarily on themselves and the information provided by their employer or savings plan provider in making retirement investment decisions, finds a recent survey by the Stable Value Investment Association (SVIA).

SVIA's Conservative Investments Survey, covering 500 workers who participate in their employer retirement savings/401(k) plan and 300 retirees who have a balance of at least $5,000 in their former 401(k) plans, finds that 52% of all retirees and almost half of all workers (48%) rely on their own judgment and investment knowledge when it comes to making retirement investment decisions.

Fifty-three percent of workers say they rely most on information provided by an employer or the savings plan provider in determining where to invest retirement savings, yet only 12% of retirees rely on this source. While this contrast is striking, over 80% of retirees report moving money out of their employer's 401(k) plan into IRAs (55%), cash (25%), and other investments (26%). A third report leaving the money with their former employer's defined contribution plan.

Retirees say they turn to financial advisers (51%), newspapers and magazines (24%), family and friends (17%), and asset allocation models (7%) for retirement advice. American workers rely less on financial advisers (44%) compared to retirees and more on other sources for retirement investment information: 32% newspapers and magazines, 26% family and friends, and 12% on asset allocation models.

When asked what is the most important source for making retirement investment decisions, 83% of workers and 69% of retirees say advice from professional financial advisors or retirement planners. "Dependence upon these assets for retirement income and the current uncertainty in the financial market motivates investors to make sure they are 'doing the right thing' when it comes to retirement investment. Professional retirement advisors and planners can provide reassurance during these rocky times," explains SVIA President, Gina Mitchell.

Sixty-nine percent of workers and 50% of retirees rely upon prospectus and other written information when making investment choices concerning their retirement savings. Fifty-seven percent of workers use workshops on retirement planning and investing for retirement investment information, while only 38% of retirees use this option. The survey finds a similar result with the use of asset allocation models and computer software when it comes to making retirement investment decisions: 42% of workers and 26% of retirees use this type of assistance.

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These findings are part of the SVIA's Conservative Investments Survey,a survey that focuses on trying to better understand the need for secure, low risk investments in our current investment climate, as well as to gauge the level of familiarity and appeal of Stable Value Funds. Greenwald and Associates conducted the survey in May 2002 through a 15-minute national survey with workers (those who participate in their employer's retirement savings plans) and retirees (those who had at least $5,000 in former retirement savings plans.)

SVIA is a non-profit organization dedicated to educating the public on the importance of saving and investing for retirement and the contribution that Stable Value Funds can make in providing for a financially secure retirement.

Stable Value Funds deliver safety and stability by preserving principal and accumulated earnings. They are similar to money market funds but offer considerably higher returns. Their returns make them comparable to intermediate bonds minus the volatility. They are available in one-fourth of all defined contribution plans and comprise more than $261 billion in assets. Stable Value Funds are also offered in Individual Retirement Accounts and 529 college savings plans.