MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Wednesday, August 30, 2006 Fido Adds to Advisor 401k Fidelity is wasting no time in taking advantage of the just-approved Pension Protection Act. The Boston Behemoth unveiled a new product for advisors built around the legislation's provisions this morning. The products key features involve automatic enrollment provisions, auto deferral increases and asset allocation funds. While Fidelity is the market leader in the mid- and large-plan markets, it has lagged behind insurers in the small plan market in terms of marketshare. In the past few years, Fidelity has been focused on the advisor-sold market and tapped David Liebrock, executive vice president, Fidelity Investments Institutional Services Company, to head the push. Those efforts are paying off, Fidelity officials claim that they grew assets in the segment by 21 percent from last year. At the end of June, Fidelity claimed $14.5 billion in its advisor product, up from $12 billion in June 2005. "We have seen significant interest in our new auto-features and we only expect that interest to grow thanks to the Pension Protection Act," said Liebrock. "By continuing to enhance our platform, Fidelity is helping advisors strengthen their competitive offering by providing them access to the investment products, technology, insight and world class service they need to help plan sponsors design a plan that fulfills their employees' retirement goals and their company's plan objectives. The newest enhancement to the advisor 401(k) is called Retirement Education Consultants. That service features automatic enrollment and Fidelity's Retirement Plan Review, a tool to help plan sponsors benchmark plan performance each year. Those enhancements should push both participation and deferral rates higher, ultimately leading to plans with larger amounts of assets. Since many advisors are compensated based on the assets in the plan, those plans should be more attractive to advisors. Fidelity is also making Retirement Education Consultants available to the Advisor 401(k) plan clients. The sonsultants can provide onsite initial enrollment meetings or online workshops to help educate employees on the benefits of their plan and motivate them to participate and increase their deferrals. According to Fidelity, participation rates for for plans that offered its automatic enrollment provisions were 22 percentage points higher in plans than for plans without the provision. Fidelity also rolled out the annual deferral increase feature last year. Since then, 42 percent of its advisor-sold plans have adopted that feature. Fidelity is combining the auto plan features with an annual checkup service for participants that shows them how well their account will fund their retirement needs. The model is based on Monte Carlo simulations of the market to project their account's future growth. Printed from: MFWire.com/story.asp?s=12665 Copyright 2006, InvestmentWires, Inc. All Rights Reserved |