Products March 30, 2010

The Principal Enhances Services for Advisers

The Principal Financial Group announced an enhanced platform of tools, services, and pricing for financial professionals.
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Financial professionals can choose the services they want to deliver and the services they want The Principal to take the lead on, including: participant education; local service support and annual plan and investment reviews; the choice of a bundled service model or working with a local third-party administrator, and investment flexibility.  
    
The Principal also said financial professionals also have access to: service and education professionals dedicated to helping financial professionals grow and manage business; more than 70 non-branded business development tools; and The Retirement Dashboard, a central location on The Principal Web site for managing client information. 

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Data & Research March 30, 2010

Participant Actions (or Lack Thereof) Helped Mitigate Downturn's Damage

New Vanguard research suggests that retirement plan participants, either as a result of conscious resolve or inertia, mitigated the recent economic downturn's damage to their retirement savings by reacting only marginally in terms of trading, contribution, and distribution behavior.
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“Resilience in Volatile Markets: 401(k) Participant Behavior September 2007-December 2009” found that most participants maintained their retirement programs through the economic downturn, while a small minority made changes that could undermine their long-term retirement security.

The data looked 3.2 million participants holding 3.4 million accounts in more than 2,000 plans recordkept by Vanguard between September 2007 and December 2009. Vanguard said the data show the median participant account balance grew by 33% in 2009, after a decline of 31% in 2008, reflecting the effects of both market improvements and ongoing contributions. Between September 2007 and December 2009, the median participant account balance grew by 10%, and six in 10 participants saw their account balances grow.      

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Despite the ongoing market volatility, in 2009, only 13% of participants traded in their retirement accounts, compared with 16% in 2008. Also in 2009, 2.9% of active participants stopped making elective contributions to their plan, down slightly from 3.1% in 2008.     

However, 18% of participants had a loan outstanding at the end of 2009, compared with 16% in 2008. Hardship withdrawals rose 9% in 2009, although only about 2% of participants took one.

The number of participants terminating employment in 2009 who chose a cash distribution rather than preserving their retirement assets was unchanged from 2008, but slightly higher than in 2007.

Vanguard said the results also show the benefits of 401(k) plan design. “Counteracting the notion that 401(k) plans and participants are in dire straits, many of these investors were able to bounce back because they were able to make regular contributions through payroll deduction and to build a balanced portfolio from among a range of options,” said Stephen Utkus, head of the Vanguard Center for Retirement Research and co-author of the report, in a press release.

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