Data & Research December 9, 2010

DB Plans Gaining New Appreciation from Workers

Retirement benefits - especially defined benefit (DB) programs - are giving employers an added advantage when it comes to attracting and retaining new employees, according to a survey by Towers Watson.
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The survey of more than 3,000 employees, conducted in May and June of 2010, found that 60% of new employees (those with less than two years of service) at employers with DB plans cited the retirement program as an important reason they chose to work for their current employer, a sharp increase from just 27% in 2009. And nearly three-fourths (72%) of new employees said the retirement program is an important reason they will stay with their employer, up from 51% in 2009.  

Conversely, just 20% of new employees with only a defined contribution (DC) plan in the retirement program said it played a role in their decision to work for their employer, up from 16% in 2009, according to a press release. Meanwhile, one-fourth (26%) said the retirement program was an important reason to remain with their current employer, unchanged from 2009.  

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Even younger workers are increasingly realizing the value of a defined benefit plan. The percentage of younger workers (less than 40 years old) who cited their DB plans as an important reason to work for their current employer jumped by more than half, from 28% in 2009 to 43% this year, the survey found. On the other hand, the corresponding figures for those with a DC-only plan declined slightly – from 19% last year to 17% in 2010.  

The survey also found that two-thirds of employees (67%) would like to continue working for their current employer until they retire, an increase from 56% in 2009. However, DB plans are much more likely than DC plans to be an important factor in the retention of employees. Four of five workers (80%) at organizations with DB plans said they plan to continue working for their employer until they retire, compared with only 62% at companies with DC plans.  

Younger employees at organizations with DB plans are also much more interested in remaining with their employer until retirement – increasing from 44% in 2009 to 70% this year.  

“Until the economy shows real signs of recovery, employees will remain hesitant about leaving secure jobs that also come with secure benefits,” said Kevin Wagner, a senior retirement consultant at Towers Watson, in the press release. “The heightened employee desire for retirement security might lead some companies to rethink their DC-only plan strategies.” 

Products December 9, 2010

Fidelity Offers Guidance for Advisers Going Independent

Fidelity has launched a program, “Options for Independence,” to help breakaway brokers understand the range of options available to them when going independent. 
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Fidelity created the program to address the needs of the growing number of advisers who are deciding to launch an independent registered investment adviser (RIA) or independent broker/dealer firm or to join an existing firm.   

The program consists of an enhanced client service model to further strengthen and streamline the support of independent firms that conduct commission- and fee-based business at Fidelity. The model features a dedicated client-experience leader who will work with advisers to help address each client’s distinct end-to-end service and processing needs.

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Complementing the client service model are four educational resources, which cover such topics as:

  • A white paper, “Options for Independence:  The Evolving Landscape”: Provides brokers in-depth analyses of the different independent models as well as the business and economic considerations, such as being a business owner versus an employee. The white paper also identifies best practices to consider when making the transition, including the importance of retaining legal support and identifying a custodian.
  • Business model consultation: Offers a high-level overview of different independent models, as well as questions that brokers should ask themselves when considering independence.  It also provides an overview of how Fidelity works with breakaway brokers to help understand the range of factors that may affect their ultimate decision.
  • Considerations before joining a firm: Identifies eight different factors for brokers to consider before joining an established RIA or independent broker/dealer, such as assessing the cultural fit and gauging the deal structure.
  • Considerations before becoming an RIA: Identifies 12 different factors for brokers to consider before starting an RIA, such as understanding the financial implications of establishing a firm and building a brand.

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