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.

Financial Engines, which provides advice to participants of 445 mostly large plans, says that about a half-million plan participants with almost $44 billion in assets use its managed accounts, often those nearing retirement. Morningstar's Investment Management division, which offers advice to about 150,000 plans, many of them small, manages the accounts of about 746,000 people with about $19 billion in assets.

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The service is most effective when it is truly customized. To get that, participants are asked to provide data about their investments outside the plan, such as other savings, old 401k plans or IRAs, and a spouse's earnings and retirement accounts. The problem is, most people don't provide all of that detail. And without it, "you're not going to get what you pay for," says Walton.

One-on-one help

If you want to manage your own account, you still may have the option of sitting down with an adviser or talking with someone on the phone who will consider your individual situation and help you create a plan. It will be up to you, however, to actually make the changes to your account and monitor it in the future.

TIAA-CREF, which provides plans to 15,000 institutions with 3.7 million participants, offers such counseling at no charge. It has 400 people based in local offices, an additional 200 who visit institutions where it offers plans and about 100 phone reps to provide such guidance.

People who take advantage of that one-on-one help are more likely to make positive changes in their savings or portfolios. Still, says James Nichols, who oversees TIAA-CREF's advice and planning, "one of the challenges is getting people to stay on track," especially as they age and their situations change.

Internet services

The widely available and free do-it-yourself service, where you plug your information into an online program offered by your plan and get recommendations back, is also the least used, according to a recent study (.pdf file) by Financial Engines and Aon Hewitt, which looked at how participants in eight plans fared between 2006 and 2010. More than twice as many participants in the plans used managed accounts as used online services.

The investors most likely to go online and put in the effort to get recommendations typically had higher earnings, saved a higher percentage of their pay and had larger balances than those who used managed accounts. They also tended to be a bit younger than the managed-account users.

The general lack of interest in taking advantage of easily accessible online services underscores how hard it is to get participants to think about and put some effort into their 401k investments.

"A large portion of participants are reluctant investors," says Christopher Jones, the chief investment officer at Financial Engines. Retirement investing "is down on the priority list -- people don't have the time for it, or the inclination."