Working Paper: NBER ID: w30261
Authors: Jonathan Reuter; David P. Richardson
Abstract: We study demand for advice within defined contribution retirement plans offered by 23 institutions where TIAA is sole recordkeeper. Advice seeking increases with age, account balance, annual contribution level, web access, and changes in marital status. More provocatively, participants who invest solely through target date funds—the dominant default investment option—are significantly less likely to seek any form of advice throughout the age distribution, raising the possibility that reliance upon defaults crowds out advice seeking. Advice seeking increases significantly following the introduction of online tools, but is only weakly correlated with market returns and investment menu changes.
Keywords: financial advice; retirement plans; demand for advice
JEL Codes: G11; G51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| age (J14) | advice seeking (G53) |
| account balance (G21) | advice seeking (G53) |
| annual contribution level (G52) | advice seeking (G53) |
| changes in marital status (J12) | advice seeking (G53) |
| reliance on target date funds (TDFs) (G23) | advice seeking (G53) |
| introduction of online tools (L86) | advice seeking (G53) |
| market returns (G19) | advice seeking (G53) |
| web access (L86) | advice seeking (G53) |