Fidelity Suite Puts the Emphasis on Outcomes

Inspired partly by the way Amazon understands and uses customer behaviors, Fidelity Investments rolled out a suite of tools and technologies with a heightened focus on outcomes.

There is inertia on the part of both plan sponsors and plan participants when it comes to successful retirement planning, says James MacDonald, president of workplace investing at Fidelity Investments.

Fidelity’s goal is to help employers measure the effectiveness of their workplace savings plans and analyze savings behavior among their employees, as well as help employees make optimal decisions when it comes to their retirement savings choices. The overall goal, of course, is achieving better retirement outcomes.

The four crucial areas that need to be improved, MacDonald tells PLANADVISER, are savings rates, cashing out of the plan, asset allocation, and loans and withdrawals. According to research by Fidelity, nearly half of workers surveyed feel they don’t have the knowledge to make decisions when it comes to saving for retirement. More than half of workers under the age of 30 have not enrolled in their workplace savings plan.

Simply providing average account balances and basic metrics is no longer enough to help employers gain insight into improving the plan, MacDonald says. “Employers want meaningful, detailed data that can help them analyze the performance of their savings plan and help ensure their workforce is making the right decisions,” he says.

Two products help drill into the plan to yield insights for plan sponsors to optimize plan design by examining employee behavior.

Plan sponsors can use the products to measure the effectiveness of their plan, provide peer benchmarks and analyze employees’ savings and investing behaviors.  They can also identify which employee segments may not be taking the right actions to prepare for retirement.

Executive Insights, for example, helps address three main concerns of plan sponsors: what is my workplace plan designed to produce; how is it performing; and what are the areas in need of attention? The platform, which has a patent pending, allows employers 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.

Data Driven

A dashboard gives data on plan performance with aggregated employee behavior metrics (participation rates, savings levels, asset allocations and withdrawal activity). This information can target employee populations that may need guidance in a specific area, as well as encourage employees who are on track. Executive Insights has been available in limited markets, but is now available to all Fidelity’s plan sponsors.

The On Plan Indicator is a metric that helps plan sponsors determine if employees are saving enough and investing appropriately for their age. This indicator will track the percentage of employees saving a total of 10% or more and who are invested with an age-based equity allocation.  The On Plan Indicator will be available this spring. 

Two tools for plan participants streamline enrollment and help them stay on track.

Fidelity’s Personal Progress Reports, available now, give employees an immediate snapshot of three critical areas: how much they are saving, how their savings is invested, and whether they are on track to reach long-term savings goals. The assessment suggests next steps for those who want to make changes, and allows them to take action with a mouse click.

A simplified way for employees to enroll in a workplace savings plan and a tool to help them understand whether their retirement savings are on track will be available this summer. The 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.  This offering, also patent pending, allows employees to select from one of three suggested savings rates and invests in a target-date fund. The program also automatically increases their savings rate by 1% annually.

Fidelity drew on its volume of retirement planning data to build the tools, MacDonald points out. “The more we know, the likelier we are to engage participants,” he says.