WASHINGTON (5/23/14)--A little help can go a long way for retirees.
Results of a study on people saving for retirement were released Thursday, revealing that investors who sought help, such as using a managed account or seeking out online advice, entered retirement with 79% more wealth than the average investor (MarketWatch May 22).
The study was conducted by the global benefits consulting firm Aon Hewitt, which tracked hundreds of thousands of savers between 2006 and 2012.
More than one-third of retirement-plan participants relied on some kind of investment help and leveraged it into median returns every year that rose 3.32% higher than those who went it alone.
In the end, the study found, an investment of $10,000 brought in $32,800 to the investor working on his or her own, while that same investment ballooned to $58,700 for the person who sought out help.
Aon also found that, when looking for retirement help, younger savers opted for target-date funds, a popular offering for new employees at many companies.
While target-date funds helped investors, however, those who switched to a personalized investment plan put together by a financial adviser earned 50 basis points or about 0.5% more.
"A well-designed, risk-adjusted basket of low-cost index fund plus professional oversight gives you the best of both worlds," the author of the MarketWatch article wrote. "(It's) cheap and effective, especially in markets where you might be tempted to cash out of a target-date fund.
The study also found that six out of 10 investors working on their own took on inappropriate levels of risk, with some being exposed to risk higher than someone who's invested entirely in a stock portfolio.