Data & Research August 21, 2012

Participants Hungry for Electronic Education, Advice

Retirement plan participants are demanding electronic education, debunking the myth that participants are not engaged in their savings. 
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Since late 2011, more than 530,000 participants have signed up for a new “opt-in” feature to receive electronic delivery of educational materials to help make decisions about employer benefits, retirement planning and other relevant financial topics, according to Bank of America Merrill Lynch’s quarterly 401(k) Wellness Scorecard. On average, nearly 2,000 participants sign up for this electronic feature daily, the report found.

“Participants are … demanding that and wanting that type of advice,” Michael Liersch, director of behavioral finance for Bank of America Merrill Lynch, told PLANADVISER.

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Participants may already know what they want to do with respect to retirement planning, but they need education and tools to enhance their planning ability, Liersch said. “When employees have the right information out on the table, we also see that they exhibit better behaviors,” he added.

Advice is another tool that can help participants plan their retirement. Participants enrolled in Bank of America Merrill Lynch’s Advice Access program are showing an increased tendency toward better financial well-being, according to results from the company’s Financial Wellness Monitor. From June 30, 2011, to June 30, 2012, the increase in “Well” participants nearly doubled for those in Advice Access (up 6%, to 87% “Well”) versus those not in Advice Access (up just 3%, to 64% “Well”).  

(Cont...)

During the recession, participants tended to maintain advice services, with 98% staying in the program, said Kevin Crain, head of institutional retirement & benefit services for Bank of America Merrill Lynch.

Continued usage of advice features was not the only thing that remained on the upside in the recession. Since 2009, which many view as the lowest point in the recession, 401(k) contribution patterns positively show a widening gap between the percent of plan participants starting/increasing their savings versus those stopping/decreasing, according to the report.

“The opt-out rates stayed very consistent [during the recession],” Crain said. Overall, Crain said he finds it encouraging that participants want to save for retirement—they just need help doing it.

Advisers should discuss solutions with sponsors that can increase retirement success, Crain added. They can encourage sponsors to set up the plan with an advice service, a higher initial deferral rate than 3%, enrollment for all eligible employees in the plan rather than just new hires, and automatic enrollment paired with automatic escalation.

The report is available here.  

Products August 21, 2012

Fidelity Launches Retirement Planning Solution

Fidelity Investments has launched Plan for Life, an enhanced retirement planning solution.
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Plan for Life takes a broader approach to retirement planning, taking into account the complex needs of employees as they move through various life stages and changes in their personal situation or their workplace benefits plan.   

As a part of the Plan for Life rollout, Fidelity is making enhancements to its overall participant offering, including:  

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  • Expanding its team of licensed phone representatives dedicated to helping guide participants through more complex benefits decisions; 
  • Broadening workplace education to include onsite retirement planning consultations, and enabling on-the-spot enrollment using mobile tablets; 
  • Introducing Income Simulator, a tool to help illustrate potential retirement income; and 
  • Rolling out enhancements on NetBenefits.com, Fidelity’s participant website, to improve navigation and drive more confident decisions around life events. 

“Plan for Life is a reflection of how our participants’ needs have evolved and expanded over the years with competing financial priorities and a heavier reliance on their workplace savings plans to help them plan for retirement,” said Julia McCarthy, executive vice president, Workplace Marketing, Solutions and Experience, Fidelity Investments. “Simply asking employees to save more money from each paycheck no longer addresses many of the challenges our participants are facing in today’s economic environment. Plan for Life and the significant investments we continue to make in our participant experience will help them manage the complexities but simplify the decisionmaking process.”

 

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