Despite difficult economic conditions, the majority of individual retirement account holders are continuing to make contributions, according to a survey conducted by Fidelity Investments and its clearing arm, National Financial Services LLC.
The investment firm surveyed about 1,000 Americans last month, including 500 IRA holders, and found that 60% of those with an IRA either made a contribution for last year or planned to do so before the April 15 deadline.
Jody Meth, an executive vice president at National Financial, said in an interview last week that people are continuing to save, despite the stock market's volatility, the real estate market's decline, and rising oil and gas prices.
"In times of volatility, there is this notion that people stop saving for retirement, and that just doesn't seem to be the case," she said.
In addition, 62% of IRA holders, and 46% of all respondents, said they have taken steps in the past year to prepare for retirement, such as increasing their IRA contributions, changing their asset allocation, consolidating accounts, or setting up automatic withdrawals.
According to the survey, investors working with an adviser were more likely to open, contribute to, or consider IRAs as part of their retirement plan; 71% of Americans who work with an adviser own at least one IRA, compared with 41% of all Americans.
Ms. Meth said this data is particularly interesting to bank-owned broker-dealers that are moving to a fee-based investment platform.
Bankers need to know that offering advisory services can be profitable, in spite of difficult economic conditions, she said. "Independent brokerage companies are ahead of the banks, because they have been offering fee-based services for a longer period of time, but banks can catch up as long as they realize the strength and the opportunity here."
Half of Americans who spoke with an adviser last year discussed an IRA, the survey found, and 81% of those respondents said the adviser recommended either opening an account or making further contributions. Of those who received IRA-related guidance, 80% said they followed it.
IRA holders who worked with an adviser were more likely than account holders overall (65% versus 60%) to make a contribution.
Despite a growing interest in saving for retirement, Ms. Meth said only 20% of those surveyed had a detailed retirement plan.
"If I was a bank broker-dealer, that is one place I'd look," she said. "Advisers and brokers need to focus on retirement. If they can develop a plan, they can develop a strong customer relationship."
Additionally, 74% of IRA holders who worked with an adviser said they had taken some action over the past year to prepare for retirement, versus 62% of all account holders.
"Saving for retirement remains one of the most important financial goals for Americans, yet there are still a significant percentage not investing in an IRA," Ms. Meth said. "This could affect their ability to accumulate enough money for a comfortable retirement. Advisers can play an integral role in helping clients maximize their retirement savings by educating them about the benefits associated with each type of IRA and the critical role these tax-advantaged accounts play in a holistic financial plan."
