Fidelity Shows Positive Changes Made After Education

Fidelity Investments announced two records set among Fidelity-administered 401(k) plans.

The average 401(k) balance rose to $74,900 at the end of the first quarter, marking an all-time high since Fidelity began tracking account balances in 1998. It also represented a nearly 12% increase from a year ago and a 58% jump from the same time period in 2009. In addition, nearly one in 10 participants increased his deferral rate during the first quarter, the largest percentage taking such action since Fidelity started tracking the figure in 2006. 

Fidelity said an analysis of plans that adopted many of its employee education programs from March 2009 through September 2010 revealed positive participant behavior changes across four important factors that contribute to retirement readiness.

Plans utilizing Fidelity’s engagement programs were nearly twice as likely to increase enrollment rates compared to those plans not adopting them during the same time period (54% versus 27%, respectively). In addition, participants in plans that leverage Fidelity’s educational communications just after enrollment were six times more likely to increase their deferral rate over participants in plans that did not utilize the programs (12% increased deferrals versus 2%, respectively).  

According to a Fidelity announcement, plans that proactively help participants with asset allocation were significantly more likely to improve age-based asset allocation across their participant population as compared to plans that didn’t provide the education (85% versus 51%, respectively).  

Finally, more than half (51%) of plans that reached out to departing employees with distribution options such as staying in plan or rolling over to a qualified retirement account, such as an IRA, decreased the number of participants cashing out. The average cash-out rate for those plans decreased by two percentage points while the rate for plans not utilizing the programs increased by five percentage points.  

Since their launch in early 2009, Fidelity’s employee engagement programs have been adopted by 92% of its plan sponsor clients.