Survey: Public Sector Employees Slower to Seek Financial Advice

A new survey finds that public sector employees are significantly less likely than their private sector peers to seek out a financial advisor for support in preparing for retirement.

In a recent poll of more than 2,000 full-time public and private sector employees nationwide, MissionSquare Research Institute sought to examine key differences in financial decision-making between public- and private-sector workers.

The subsequent research report, “How to Help Retirement Plan Participants Make Optimal Financial Decisions: Evidence From Public and Private Sector Employee Behaviors,” details a number of differences in terms of how workers from each sector plan and save for retirement, for instance.

The most significant gap, however, appears in seeking guidance from financial advisors, according to a MissionSquare statement highlighting key findings to emerge from the research.

Survey participants were segmented into one of six categories, based on whether they are public or private sector employees, and the type of retirement plan they participate in: defined-benefit (DB) only, defined-contribution (DC) only or both DB and DC.

Among DB-only plan participants, just 46% of public sector employees reported working with a financial professional, compared with 70% in the private sector who said the same.

Employers and plan providers have opportunities to expand public sector employees’ access to financial guidance, and to better support workers’ long-term financial outcomes, according to MissionSquare.

The researchers detailed a number of steps to that end, such as increasing employees’ access to human financial advice, optimizing plan design to encourage higher savings and reducing complexity in investment menus, for example.

“Public sector employees are often navigating complex financial decisions with limited guidance or turning to friends and family instead of professional resources for support,” said study co-author Zhikun Liu, PhD, vice president of MissionSquare and head of the Institute.

“Over time, these decisions can lead to uncertainty around investment decisions, lower financial confidence, and unclear retirement income strategies, indicating a clear need for employers to intervene and offer their support,” Liu continued.

“Employees do not make a single decision when it comes to planning for their retirement. They make a sequence of interconnected decisions over decades. Our research shows that thoughtful plan design, combined with access to professional guidance, can help significantly improve long-term financial outcomes for workers across both the public and private sectors.”