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Even before Enron became a household word, it was an open secret in the pension world that too many people were making lousy investment decisions with their 401(k) money. If they weren't overdosing on company stock, they were being too cautious, not diversifying enough or diversifying irrationally.

What investors need, most experts agree, is better advice. The question is, Where will they find it?

They can go to online planners or personal financial advisers, but that requires some initiative (and money). They would be much more likely to take advice if they could get it, like their 401(k) itself, on the job. Most employers, however, have been reluctant to provide anything beyond platitudes, terrified that if they give employees specific advice, and employees lose money by following that advice, they will be sued.

Two bills in Congress, and a recent decision by the Labor Department, could encourage more employers to offer hands-on advice. But there are serious questions about how effective these moves would be.

Currently, anyone with a 401(k) has few options regarding low-cost advice. Somewhat personalized guidance is available from Web sites like www.financialengines.com and www.quicken.com. Investors are asked about their income, assets, the age when they hope to retire, expected salary raises and inflation rates and perhaps a list of their 401(k) holdings. With little or no charge, the sites project whether retirement goals can be met. Some sites also recommend how much money to put in stocks and mutual funds.

But not many people relish getting such personal financial advice from an impersonal Web site. "In general, people like to talk to people," says Robert Liberto, a vice president at Segal Advisors, a New York- based investment consulting company.

Talk is not cheap. For a thorough checkup of a client's entire financial picture, middle-class investors will probably need 2 to 10 hours, at $100 to $200 an hour. (Those whose net worth runs into seven figures may pay a more rarefied class of advisers a retainer of $10,000, or a percentage of assets.)

Naturally, few investors want to fork over this money. Besides, they may not know how to find an adviser, nor have the time to search for one. For these reasons, many financial experts say that employers that sponsor 401(k) plans have a moral obligation to include advice as part of their benefits package.

"If we're going to throw the responsibility on the individual, we should give them the tools," says Brian Schaefer, the president of 401(k) Ventures in Palo Alto, Calif., which provides companies with investor education for their employees.

It is unclear how many employers are offering their workers advice. A survey of 909 401(k) plans in December 2000 by the Profit Sharing/401(k) Council of America found that only 35 percent gave employees investment advice. More than half of them picked up the tab.

This figure is probably overgenerous. Forty-seven percent offered services only on the Internet, and of those providing individual advice, most were small companies, with 50 or fewer participants. Nor did the survey specify whether the advice was available to everyone on a regular basis, only to top brass as a perk or as a one-shot offer after a round of layoffs.

IN the mid-90's, the Labor Department expanded its guidelines to encourage employers to give more advice, as long as it comes from an independent adviser and not directly from the employer or the investment company that manages the assets. These rulings were meant to alert employers that there was no "untoward fiduciary liability" if the employer chose the adviser prudently and monitored the service, says Olena Berg Lacy, the assistant Labor secretary in charge of pensions during the Clinton administration. If anything, she adds, "you probably decrease your liability by giving your employees the help they need." Ms. Lacy is now a director of financialengines.com.

In December, those rules were further loosened. The Labor Department said that in limited circumstances, an independent firm could actually take over the decision-making from the employee instead of merely suggesting investment strategies that the employee is free to ignore. But the investment decisions must be strongly based on computer models.

These Labor Department rulings have not persuaded employers they are off the hook. So Congress is stepping in. Senators Jeff Bingaman, Democrat of New Mexico, and Susan Collins, Republican from Maine, introduced a bill last year that unambiguously states that employers are not liable for losses stemming from investment advice rendered by "qualified" third parties. This bill may be included in Enron-related legislation sponsored by Senator Edward M. Kennedy, Democrat of Massachusetts.

Representative John A. Boehner, a Republican from Ohio, has sponsored a more controversial bill, supported by the Bush administration, that would allow employers to hire mutual fund companies, insurers and other investment firms that already manage the employers' 401(k) assets to provide advice. This bill, passed by the House in November, is now part of the White House's broader post-Enron pensions package.

Mr. Boehner said that such a change would help investors. "If you don't allow those that have the most experience to offer investment advice," he says, "we'd diminish the amount of advice that would be available to employees." Because big investment companies can bundle their advice with other services, these firms would presumably charge less than independent financial planners. Moreover, these firms, Mr. Boehner says, would be required to disclose conflicts of interest.

This plan has many critics, who warn that there would be too much temptation for a Vanguard or a Fidelity to advise 401(k) investors that the best allocation for their money is — surprise! — a high-fee Vanguard or Fidelity fund. Employers need to hire independent firms "to come in just for advice, absolutely no other hidden agenda, not affiliated with a sales organization," says Sheryl Garrett, the president of Garrett Planning Network, a Kansas-based network of small financial planners.

In the post-Enron world, some skeptics wonder if any investment advice from an employer can be trusted. During recent Senate hearings, a few senators questioned whether advisers paid by employers would recommend not buying company stock. But restricting employer-sponsored advisers would leave employees to find — and pay for — advice on their own. That may be the worst predicament. "What happened at Enron really underscores the need to give participants all the help that they need in making the right decision," Ms. Lacy of financialengines.com, says.

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