Data & Research July 12, 2011

Fiduciary Support Not a Focus in Provider Search

Although regulatory changes to fiduciary responsibilities and disclosures loom on the horizon, plan sponsors of all sizes say that strong fiduciary support services falls low on the list of factors that influence their choice of plan providers.
Reported by

Retirement Planscape 2011, a new study by Cogent Research, shows fiduciary support services is ranked 12th overall, being lowest among micro plans (those who oversee plans with less than $5 million in assets) where only 9% say it matters.  

According to a release about the survey of a representative survey of 1,600 DC plan sponsors across all plan sizes and industries, in terms of which companies have done a good job associating their brand with providing strong fiduciary support services among micro plan sponsors, firms like Ascensus (33%), Principal (30%), and The Standard (25%) match, or in some cases even outpace, dominant players like Vanguard, T. Rowe, and even Fidelity. However, it is worth noting that no one provider is seen as being strong in this area among a majority of micro plan sponsors, Cogent said.  

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

In the mega market ($500 million or more), a different set of providers emerges as being strong on fiduciary support services, including industry leaders Vanguard (51%) and Fidelity Investments (47%) which far outpace all other providers. T. Rowe Price (31%), Hewitt (27%) and Charles Schwab (25%) – although somewhat far behind – make very good showings in the area as well. Beyond those five plan providers, no one provider garners more than a 20% share in the mega market.
 
“Plan providers have an opportunity to educate plan sponsors in the smaller end of the market about the scope of the regulatory changes, as well as to differentiate themselves by demonstrating their expertise in the area of fiduciary support,” said Linda York, Senior Product Director at Cogent Research, in the press release.
 

Data & Research July 12, 2011

Fidelity Finds Stock Plan Participants Need Education

The majority of workers with employee stock option, stock purchase, and restricted stock plans have sold shares obtained via their company’s stock plan in the past, but many did so without knowing the tax implications of their actions.
Reported by

A study from Fidelity Investments found that company stock plans are the number two savings vehicle of choice for many participants, but most (52%) could only “generally” explain it and more than one in ten (11%) said that they could not explain their employee stock plan “at all.” 

The Fidelity Stock Plan Services study, which looked at the behaviors of more than 1,900 stock plan participants at 130 companies nationwide, reveals that the majority or participants (52%) purchased or exercised stock grants in the past and 70% sold shares obtained via their company’s stock plan. About one in four (26%) used the proceeds from a stock sale to pay down credit card debt or other bills, 13% reinvested the proceeds into their retirement plan, and 11% used them for an emergency need.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

However, a release about the survey results said many participants surveyed (35%) said they don’t know the tax implications of selling their stock. When looking for support in making these decisions, 10% said they don’t research investment information and another 15% said they make all of their decisions on their own.  

Only 18% said investment advisers are the first place they go for investment information. One-fifth (20%) said they go to brokerage services Web sites and another 13% turn to friends and family (including their spouse).  

“Our research indicates that, although stock plan participants are in many ways financially savvy and save aggressively, there remains a clear need for better education on how stock plan assets can contribute to long-term financial success,” said Joan Bloom, senior vice president in Fidelity’s Stock Plan Services business.

 

«