Data & Research July 14, 2014

Help Service Members Avoid Financial Abuse

Military members have significant financial concerns and seek protection from potential abuse, according to a recent survey by The National Foundation for Credit Counseling (NFCC).
Reported by

A strong majority (77%) of service members have financial worries, the NFCC survey shows. More than half indicate (55%) they are “not at all prepared” for a financial emergency.  Meanwhile, 60% of respondents say they had to look outside traditional financial institutions and turn to nontraditional lenders—often at high rates of interest—to meet short-term financial needs.

The NFCC suggests these trends put military members at increased risk for abuse from unscrupulous providers and make them ideal candidates for financial advice.  

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

“No one should be victimized by financial abuse, particularly the military,” says Gail Cunningham, spokesperson for the NFCC. “One way to avoid financial abuse is through financial education, as an educated consumer is always a better consumer, one more equipped to identify fraud or deception and make wise financial decisions.”

Advisers might want to use Military Consumer Protection Day, observed July 16, as an opportunity to show they are “conscious of protecting those who defend our country.” The NFCC also urges advisers to direct military and nonmilitary clients to its Sharpen Your Financial Focus program, sponsored by Wells Fargo. The program presents 10 financial wellness lessons ranging from the basics of personal banking to best practices for planning and investing for retirement.

NFCC says military members can further polish their financial skills using a one-on-one financial review through its financial focus program. Group workshops and the “MyMoneyCheckUp,” a financial self-assessment, are also available, the NFCC says. 

Opportunities to improve financial skills can help service members face unplanned financial circumstances with a better chance of success. “Stressful situations can result in poor choices, with decisions often made out of desperation,” Cunningham says.

More information is available on NFCC’s website.

Products July 11, 2014

Fidelity Offers Roadmap for Improving Retirement Outcomes

Fidelity Investments has launched an initiative to help employers evaluate and improve the retirement readiness of their employees.
Reported by

The Retirement Vision 2020 initiative has a central Web page, which contains a seven-minute video, as well as links to a related white paper, “Retirement Vision 2020: Fidelity’s Prescription to Help Drive Better Outcomes,” and infographic. This content highlights a four-step approach to improving retirement outcomes for employees and help them better prepare for retirement.

These steps include:

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

  • Designing the retirement plan for income;
  • Accounting for health care expenses;
  • Engaging and empowering employees via guidance and access to resources; and
  • Helping employees transition into retirement with confidence.

Designing for Income

Fidelity recommends designing a 401(k) plan with a targeted income replacement goal, keeping in mind factors such as other benefits offered and overall plan demographics.

Doug Fisher, senior vice president of Thought Leadership and Policy Development for Workplace Investing at Fidelity Investments, tells PLANADVISER that over the last few years, Fidelity has noted factors that are causing employers to question whether their plans are doing a good enough job of preparing employees for retirement.

One factor is several generations now coexist in the workforce, and not all of these age groups have the same retirement needs or preferred method for receiving information, says the Boston-based Fisher. Another factor is employers are now living with the third generation of defined contribution plans and are beginning to question whether these plans are helping employees save adequately for retirement.

“These factors led to conversations with plan sponsors, including the need for employers to have a snapshot of how employees are doing when it comes to income replacement for retirement,” says Fisher.

Accounting for Health Care Expenses

Fidelity encourages both employers and employees to recognize the role health care expenses are likely to play in retirement. Health care options such as high deductible health plans (HDHPs) and health savings accounts (HSAs) can potentially increase employee savings opportunities.

Fisher notes that plan sponsors are aware of increasing health care costs and are rethinking their health care benefits strategies to address this issue, as well as the impact of health care reforms such as the Patient Protection and Affordable Care Act. Part of evaluating the effectiveness of their retirement plans, says Fisher, is ensuring that health care costs, for both pre- and post-retirement, are part of employees’ decisions about saving.

Engaging and Empowering Employees

Fidelity promotes the importance of providing employees with guidance about retirement and easy access to resources, which can drive engagement and affect behavior.

In terms of engaging employees, having multiple methods of delivering information is important, says Fisher. Designing content to be viewed via tablets, smartphone/mobile technology and the Web should all be included.

Helping Employees Transition

Plan sponsors should not only prompt employees to think about their future, but also assist them with decisions.

Fisher notes that one of the growing areas of interest with regard to engagement is the retirement readiness of employees age 50 and older. For this age group, services such as retiree health care transition, income replacement, Medicare selection and evaluating portfolio income generation come into play.

“For these issues, it’s important to start talking about them with employees earlier in their careers,” says Fisher. “You can’t afford to wait until the employee turns 65 and just assume that everything is going to be okay.”

What to Do Next

“The four main strategies outlined in our material act as a framework for employers to consider. Underneath these strategies, Fidelity can provide employers with related data and analytics, as well as products and services,” says Fisher.

He adds, “All employers have different needs, but reviewing the information on our Retirement Vision 2020 page can kick off a conversation with plan sponsors about how their plan is doing and what can be done to improve it.”

While services are only available to those with Fidelity retirement plans, Fisher points out that “the basic framework outlined in the white paper can be used by any retirement plan, regardless of whether it’s under Fidelity.”

«