Image: 401k © Tom Grill, Corbis

Amid volatile markets and concerns about how workers are investing their retirement savings, more 401k plans are offering participants specific investment advice and even automatic account management to make investing decisions easier.

That should be a good thing: Surveys show that formal advice leads investors to increase their savings, diversify their holdings and continue holding stocks even when the market takes a plunge.

But here's the problem: Only about a quarter of the people who have access to advice through their retirement plans actually take advantage of it, according to retirement-plan providers and firms that provide advice services. And most workers who do use advisory services neglect to provide the personal details that would make the advice more valuable.

For many years, 401k and similar plans offered mostly education and "guidance," such as brochures, seminars and worksheets that gave employees generic suggestions about how to manage their accounts. Providing advice goes much further, offering specific recommendations about how much to invest in specific funds in the employer's plan.

It also carries a fiduciary responsibility, or a requirement to put investors' interests first. Because of that, most advice services are offered by companies other than the investment firm that provides the 401k plan's fund offerings.

A recent survey of 820 profit-sharing and 401k plans by the nonprofit Plan Sponsor Council of America found that 58% offered investment advice in 2010, most commonly online services, one-on-one counseling and telephone hotlines. That was up from 47% of companies surveyed in 2005. Just over a third of the plans offered professional account management, up from 24% in 2005.

Among large companies, 74% now offer advice or managed accounts to plan participants, up from 50% in 2009, says benefits consultant Aon Hewitt.

Consultants and advice providers say more retirement plans are offering such services in part because recent market volatility has left many people unsure of what to do. "When times are tough, there's a bigger demand for advice," says Chris Lyon, partner at Rocaton Investment Advisors, a Norwalk, Conn., investment-consulting company.

In addition, as companies shift to 401k plans from pension plans, it has become apparent that many employees are ill-equipped to manage their investments. They may make costly decisions, such as moving out of stocks only after the market has tanked. Many older investors are too heavily invested in stocks or, worse, their own company's stock, while some young workers avoid stocks altogether.

Poor investment decisions aren't tied to specific jobs or salaries, says Sue Walton, senior investment consultant for Towers Watson, a consulting company. She says she's seen manufacturing companies where "some of the folks on the line make more savvy decisions than those in the executive suite."

If you are comfortable studying the various funds in your company plan, assessing the funds' expenses, building a diversified mix of choices and tweaking your choices once a year or so, you probably don't need advice. But for those who are less sure, here's a rundown of what's available:

Managed accounts

In most managed accounts, a professional money manager creates and monitors a customized investment portfolio for clients, usually wealthy investors, often for a fee of 1% or more of the assets under management. A managed account for a 401k, by contrast, is limited to the investment options offered in the plan.

Typically, a sophisticated computer program considers your age and pay, expected retirement date, size of your 401k and your contributions and then selects an appropriate allocation. The account is regularly rebalanced and adjusted as you age or when plan choices or market conditions change.

While a few plans pick up the cost of managed accounts, most people will pay fees of 0.2% to 0.6% of assets a year, or $20 to $60 for every $10,000 invested, depending on how much is invested and what the company has negotiated. It's basically the equivalent of a personal trainer or a medically monitored diet for your retirement plan.