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Fidelity Addresses Retirement Savings Shortfall

Initiative aims to help sponsors improve their defined contribution plans.

Joel P. Bruckenstein, 04/13/2006

Allow me to describe a process for you. It is a multistep planning process. It includes establishing a client-advisor relationship, gathering data to establish goals and objectives, analyzing the current status, developing a plan and monitoring the plan.

Sounds a lot like the financial planning process; doesn't it? Well, it could be, but in this case it describes a new initiative from Fidelity Investments called Fidelity Plan Sponsor Advantage.

Quite frankly, after writing about Fidelity's new Roadmap Planning Tool for RIAs in my other article this month, I was a little bit hesitant to write a second Fidelity story so soon. But credit should be given where credit is due, and it appears to me that Fidelity has done some excellent work here.

There were two themes in particular that piqued my interest in Fidelity Plan Sponsor Advantage.

The first is the typical American's lack of preparedness for retirement. According to Jack Callahan, president of Fidelity Institutional Retirement Service Co.: "Although defined contribution plans are rapidly becoming the primary retirement savings vehicle for American workers, a significant percentage of employees fail to maximize this important retirement savings opportunity. Fidelity developed Plan Sponsor Advantage in response to the increasing number of plan sponsors asking for assistance in helping them manage risk by driving employee participation, improving plan effectiveness and helping employees more effectively save for retirement."

The second theme is workflow, technology, and efficiency. As one who preaches these themes on a constant basis to advisors, I was very interested to hear that Fidelity was adapting these techniques and applying them to servicing plan sponsors.

There are numerous studies indicating that Americans are not saving enough for retirement. A survey that Fidelity conducted last May found that one in three workers have pushed back their expected retirement timetable due to financial shortfalls. Of those continuing to work, the reasons cited were:

  • They have not saved enough for retirement (55%)
  • They started saving for retirement too late (35%)
  • They continue to work for employer health coverage (34%)
  • Poor investment choices/market fluctuations (27%)

Clearly, there is room for improvement, and for those firms concerned about the long-term welfare of their employees, Fidelity Plan Sponsor Advantage can help.

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