THOUGHT LEADERSHIP

Three Key Insights to Consider for Building Confidence and Improving Outcomes

Insights on how using increased levels of guidance and advice may help build better outcomes for your clients’ employees
401(k) decisions are intimidating
to the majority of savers
Only 44% of participants feel comfortable making decisions about their 401(k)
Professional help means greater confidence in 401(k) decision making.
74% of participants are confident when they have help from a professional

74% of participants are confident when they have help from a professional1

87% of participants increased their savings rates after receiving tailored advice.5

87% of participants who received personalized advice increased their savings rates2

Through plan design, sponsors can help make it easier for employees to access personalized advice and ongoing professional management, creating the opportunity for better outcomes
70% of participants who experience a consultation increase their savings rate

70% of participants who opted-in to a managed account service and went through an advice consultation increased their savings rate3

Over 70% of participants with access to a managed account service chose it over a one-time recommendation.4

Over 70% of participants with access to a managed account service chose ongoing professional retirement plan advice over a one-time recommendation4

The bottom line: For most participants, the use of multiple data points coupled with ongoing professional management leads to 40% more income in retirement
Summary Help guide participants down a personalized path to retirement.
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Each participant takes a different journey to retirement. Offering access to personalized advice and a managed account service may help them reach their destination. Explore the available plan design choices for offering advice within your plan.

Schwab Retirement Plan Services offers choices for your plan designed to help participants find a clear path forward.

Schwab Retirement Plan Services has plan design choices that can help your participants find a clear path forward.

For more information on how we may help participants explore ways toward achieving better possibilities, talk to your consultant or visit schwab.com/MAS to learn more.

1 Source: Schwab Retirement Plan Services, Inc. 401(k) Participant Study, 2016
This online survey of U.S. 401( k) participants was conducted by Koski Research for Schwab Retirement Plan Services, Inc. Koski Research is neither affiliated with nor employed by Schwab Retirement Plan Services, Inc. Survey results are based on 288 interviews and have a 3% margin of error at the 95% confidence level. Survey respondents worked for companies with at least 25 employees, were current contributors to their 401(k) plans, and were 25–35 years old. Survey respondents were not asked to indicate whether they had 401(k) accounts with Schwab Retirement Plan Services, Inc. All data is self-reported by study participants and is not verified or validated. Respondents participated in the study June 2–8, 2016.

2 Source: “The Impact of Expert Guidance on Participant Savings and Investment Behaviors,” Working Paper Blanchett (David Blanchett, August 2014): http://corporate.morningstar.com/US/documents/ResearchPapers/Expert_Guidance.pdf.
Morningstar® Retirement ManagerSM, an advice and managed account program, is offered by Morningstar Investment Management LLC and is intended for citizens or legal residents of the United States or its territories. The investment advice delivered through Morningstar Retirement Manager is provided by Morningstar Investment Management LLC, a registered investment adviser and subsidiary of Morningstar, Inc. The Morningstar name and logo are registered marks of Morningstar, Inc. This figure represents the potential wealth increase an average 25-year-old could have at retirement when using an online managed account or advice service versus an average 25-year-old who did not use an online managed account or advice service. The analysis is based on 58,444 participants who used the Morningstar Retirement Manager service, either for managed accounts or advice, between the dates of January 2006 and February 2014. As of February 2017, Morningstar Investment Management LLC affirms the original findings of this source are still valid. Participants are grouped by the age when they first implemented or received advice from Morningstar Retirement Manager and are assumed to have an initial retirement account value of $0 and a retirement age of 65. The results showed that the average participant who first used Morningstar Retirement Manager as a 25-year-old with a 0.4% annual fee may potentially realize 38.9% more retirement income at retirement than an average 25-year-old participant who did not use Morningstar Retirement Manager. Similarly, the average 45-year-old using Morningstar Retirement Manager with a 0.4% annual fee could have 23.3% more and the average 55-year-old could have 13.8% more retirement income at retirement. The amount of additional retirement income attributed to the use of Morningstar Retirement Manager at retirement varied by age and tended to decrease with the age the participant first used the Morningstar Retirement Manager service. Additionally, the potential amount of additional retirement income increased as the management fee decreased; conversely, decreased as the management fee increased. The average difference in the saving rate before and after using Morningstar Retirement Manager was calculated for each age group. The savings rate was applied to an assumed median income value for each age group. In a similar manner, the average difference in portfolio investment return before and after using Morningstar Retirement Manager was calculated for each age group. Six different annual fee levels (0.0%, 0.2%, 0.4%, 0.6%, 0.8%, and 1.0%) for the Morningstar Retirement Manager advice service were analyzed, and the fee was applied to the average portfolio balance for each age group on an annual basis. The final account value for each age group at retirement age was then compared for each annual fee level. This analysis does not account for all portfolio costs such as fees, taxes, or expenses other than the annual account fee. If included, they would lower the potential amount of additional retirement income at retirement shown in this analysis. In no way should the results of this analysis be considered indicative or a guarantee of the future performance of an actual client using Morningstar Retirement Manager or considered indicative of the actual performance achieved by actual participants that have used Morningstar Retirement Manager. Actual results of participants that use Morningstar Retirement Manager may differ substantially from the results shown here and may include an individual participant incurring a loss. Morningstar Investment Management LLC does not guarantee that the results of their advice, recommendations, or the objectives of Morningstar Retirement Manager will be achieved.

3 Source: 69.57% for managed account opt-in, based on Schwab Plan data from January 1–December 1, 2017.
Advice consultants are registered representatives of CS&Co.; not employees of the independent registered investment advisor (“Advisor”). Advice consultants may facilitate participant access to the Advisor’s services, but do not provide investment advice or recommendations regarding the Advisor’s services.

4 Source: 72.9% opted for managed account opt-in, based on Schwab Plan data from January 1–December 1, 2017.
Retirement plan investment advice is formulated and provided by an independent third-party advisor, which is not affiliated with or an agent of Schwab Retirement Plan Services, Inc. (SRPS); or any of its affiliates. Plan sponsors must elect to make the retirement plan investment advice service available for their plan. The term “personalized advice” refers to personal participant data such as age, salary, and plan account balance, which will form the basis by which the independent third-party advisor will establish the participant’s investment strategy.
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