Certified Plan Sponsor Professional (CPSP) Practice Exam

What is a characteristic of retirement plan participants who work with investment advisors compared to others?

1. They have lower risk tolerance.

2. They generally have higher savings goals and save more.

3. They are less likely to participate in the plan.

4. They prefer traditional investment options.

The correct answer is: They generally have higher savings goals and save more.

Retirement plan participants who work with investment advisors typically demonstrate higher savings goals and save more. This can be attributed to several factors, including the personalized guidance and tailored strategies that investment advisors provide. These advisors assist participants in understanding their financial needs, helping them set realistic and ambitious savings objectives aligned with their long-term retirement goals. Additionally, the support and expertise gained from working with an investment advisor often empower participants to make more informed decisions regarding their contributions and investment choices. This heightened awareness and professional assistance likely lead participants to prioritize their retirement savings and engage more actively in their plans compared to those who do not utilize advisory services. Therefore, the characteristic of having higher savings goals and saving more is reflective of the proactive financial behavior fostered through the relationship with investment advisors.