Fidelity to offer new investment tools

By BenefitsPro


By Paula Aven Gladych

Fidelity Investments is rolling out a new suite of tools and technology to help both employers and employees make better retirement planning decisions and achieve better outcomes.

The tools enable employers to measure the effectiveness of their workplace savings plans and analyze savings behavior among their employees.

Defined contribution retirement plans have become the main savings vehicle for most Americans so employers have struggled to find ways to get employees to take an active interest in their future savings and make better decisions.

Recent Fidelity research found that 72 percent of employers ranked low employee savings as one of their biggest concerns and more than half cited the need to address frequent loans and hardship withdrawals by employees.

Nearly half of workers surveyed said they don’t feel they have the knowledge to make decisions when it comes to saving for retirement and more than half of workers younger than age 30 have not enrolled in their workplace savings plan.

“We’re looking to enhance and provide employers and employees with information and insights to help them deliver better outcomes,” said Beth McHugh, Fidelity’s vice president of thought leadership.

The company is launching a dashboard for plan sponsors called Executive Insights, which is a tool that helps employers determine what their workplace retirement plan is designed to produce, how it is performing and what areas need attention. The platform allows them to determine the full potential of their savings plan through the ability to view and model potential income replacement rates that various plan designs could yield.

It displays aggregated employee behavior metrics in a holistic way, she said. It will show participation rates, withdrawal levels, asset allocation and show employers how well employees are doing compared to their peers.

Fidelity’s On Plan Indicator is a new metric to help employers determine if their employees are saving enough and investing appropriately for their age. It tracks the percentage of employees saving a total of 10 percent or more and who are invested with an age-based equity allocation. This tool will be available this spring.

Fidelity’s Easy Enroll and Easy Savings program simplifies the enrollment process by allowing employees to join their workplace savings plan with just two clicks, using a smartphone, tablet or desktop. It will allow employees to select from one of three suggested savings rates and invests in a target-date fund.

It will leverage some behavioral science that shows employees, when given a choice of three deferral options for retirement savings, inevitably go for the lowest rate. So if the lowest deferral rate is 3 percent, they will defer at 3 percent.

Fidelity recommends 8 percent as the lowest deferral rate. With most auto enrollment programs starting at 3 percent, “that is not going to get them to 10 to 15 percent as quickly as possible,” she said.

Fidelity Investments is one of the world’s largest providers of financial services with assets under administration of $4.5 trillion, including managed assets of $1.9 trillion as of Jan. 31, 2014.

Originally published on BenefitsPro.com