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Shrm 401(K) Study
 

Shrm 401(K) Study

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401(k) Study - SHRM

401(k) Study - SHRM

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    Shrm 401(K) Study Shrm 401(K) Study Presentation Transcript

    • SHRM Poll: 401(k) Investment Education and Advice Organizations Are Providing to Plan Participants August 25, 2010
    • Introduction • The 401 (k) plans covered in this poll include both traditional employer-sponsored 401 (k) plans as well as Roth 401 (k) plans. 401(k) Investment Education and Advice | ©SHRM 2010 2
    • Does your organization sponsor a 401(k) plan? Not applicable; the plan sponsor does not offer 401(k) plans, No, 14% 4% Yes, 82% Privately owned for-profit organizations (94%) were more likely than nonprofit (51%) and government Note: n = 578. (39%) sectors to report that they sponsor a 401(k) plan. 401(k) Investment Education and Advice | ©SHRM 2010 3
    • How many participants are in your 401(k) plan(s)? 1 to 150 plan participants 19% 151 to 500 plan participants 24% 501 or more plan participants 52% Unsure about the number of participants in our 401(k) 6% plans 0% 10% 20% 30% 40% 50% 60% Publicly owned for-profits (73%) were more likely than privately owned for-profits (45%) and nonprofits (44%) to have 501 or more participants in their 401 (k) plan. Note: n = 471. Percentages do not total 100% due to rounding. Only respondents who serve as representatives of a 401(k) plan sponsor were included in this analysis. 401(k) Investment Education and Advice | ©SHRM 2010 4
    • Does the plan you represent provide or make available any of the following services to 401(k) plan participants? Yes No Unsure Investment advice provided directly by the plan you represent, as defined under applicable DOL rules and regulations (for example, individualized recommendations to invest, purchase or sell 39% 47% 13% investments and funds based on the particular needs of a plan participant) Investment advice provided through an independent third party (for example, Ibbotson or Financial Engines), where a third party 23% 59% 18% serves in an ERISA fiduciary capacity Investment advice provided by or through an independent third party (for example, Ibbotson or Financial Engines), where a third party 21% 60% 19% does not serve in an ERISA fiduciary capacity Note: n = 423 - 435. Percentages do not total 100% due to rounding. Only respondents who serve as representatives of a 401(k) plan sponsor were included in this analysis. 401(k) Investment Education and Advice | ©SHRM 2010 5
    • Other services the plan provides or makes available to 401(k) plan participants • Retirement planning tools online. • Pay stub modeling; investment advisors available to offer fund selections. • Our financial advisor provides investment information. • Offer investment options/assistance with directives and account management, but refer employees to personal financial planner for advice. • Local investment broker provides training to new employees and is available bi-weekly to employees to answer questions. • Information is provided in the quarterly statements that are sent to participants. We are also in the works of doing an education program. • General financial services advice, which includes how to incorporate other types of retirement savings tools and how to use them with a 401(k). • Financial and retirement advice provided to employees at no cost. • Annual education and helpful web site. • Advice is offered through a bank that has investment professionals. • A financial representative (not associated with the plan sponsor) comes in quarterly. 401(k) Investment Education and Advice | ©SHRM 2010 6
    • Does the plan provide or make available investment education to 401(k) plan participants? Unsure, 6% No, 7% Yes, 87% Note: n = 436. 401(k) Investment Education and Advice | ©SHRM 2010 7
    • In what format is the investment education presented? Brochures or other written materials (e.g., mailings and online access) 98% 1% 1% Computer modeling (including web-based interactive tools) 90% 7% 3% Call center or helpdesk 87% 11% 3% Group seminars 80% 16% 4% Individual sessions 60% 33% 7% Automated voice response system 49% 38% 13% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Yes No Unsure Note: n = 343-366. Percentages do not total 100% due to rounding. Only respondents whose plan provides or makes available investment education to 401(k) participants were included in this analysis. 401(k) Investment Education and Advice | ©SHRM 2010 8
    • Which of the following are the subjects of that investment education? Plan information (e.g., the terms of the plan, benefits of plan participation and increasing plan contributions) 97% 1% 2% Investment alternatives - listing all funds available in the plan 97% 1% 2% General financial and investment information (e.g., determining investment time horizons and assessing risk tolerance) 94% 2% 4% Interactive investment materials (e.g., questionnaires or software that help plan participants estimate future retirement income needs) 87% 8% 5% Investment alternatives--highlighting specific funds available in the plan 61% 27% 12% Non-individualized asset allocation model 59% 17% 24% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Yes No Unsure Note: n = 339-359. Only respondents whose plan provides or makes available investment education to 401(k) participants were included in this analysis. 401(k) Investment Education and Advice | ©SHRM 2010 9
    • Does the plan provide or make available investment advice to 401(k) plan participants? Unsure, 12% No, 37% Yes, 51% Organizations with U.S.-based operations only were more likely than multinational organizations to report that their plan provided or made available investment advice to 401(k) plan participants. Note: n = 421. 401(k) Investment Education and Advice | ©SHRM 2010 10
    • In what format is the investment advice presented? Brochures or other written materials (e.g., mailings and 82% 15% 3% online access) Computer modeling (including web-based interactive tools) 81% 13% 5% Call center or helpdesk 74% 23% 3% Individual sessions 71% 23% 6% Managed accounts (i.e., a participant’s 401(k) investments are professionally managed by the plan) 68% 20% 12% Group seminars 57% 38% 5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Yes No Unsure Note: n = 191-202. Percentages do not total 100% due to rounding. Only respondents whose plan provides or makes available investment advice to 401(k) participants were included in this analysis. 401(k) Investment Education and Advice | ©SHRM 2010 11
    • In what format is the investment advice presented? Comparison by Organization’s Operations and Sector • Individual Sessions (by operations): Organizations with operations based only in the United States (76%) were more likely than multinational organizations (57%) to report using individual sessions to present investment advice. • Individual Session (by sector): Nonprofits (88%) were more likely than publicly owned for-profits (53%) to report using individual sessions to present investment advice. 401(k) Investment Education and Advice | ©SHRM 2010 12
    • Which of the following are the subjects of that investment advice? Fund investments 94% 2% 4% Contribution level 90% 4% 6% Asset class allocation 88% 6% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Yes No Unsure Note: n = 205-210. Only respondents whose plan provides or makes available investment advice to 401(k) participants were included in this analysis. 401(k) Investment Education and Advice | ©SHRM 2010 13
    • Does the plan allow for direct marketing by the plan’s service provider(s) of products or services outside of those offered within a 401(k) plan to participants? Unsure, 22% Yes, 7% No, 70% Note: n = 412. Percentages do not total 100% due to rounding. 401(k) Investment Education and Advice | ©SHRM 2010 14
    • Which of the following practices, if any, does your organization currently provide or anticipate providing for investment advice services to 401(k) plan participants, in light of DOL regulations recently published under the Pension Protection Act (PPA)? Computer-model-based advice, pursuant to the PPA-eligible investment advice arrangement (provisions include, among other 42% 6% 17% 35% things, that the computer model has been certified by an eligible investment expert and is audited annually by an independent auditor) Level-fee-based advice, pursuant to the PPA-eligible investment advice arrangement (provisions include, among other things, that 15% 8% 33% compensation to the adviser does not vary depending on the basis of 44% any investment option recommended). 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Yes, currently provide No, do not currently provide but plan to provide No, do not currently provide and do not plan to provide Unsure Note: n = 388-391. 401(k) Investment Education and Advice | ©SHRM 2010 15
    • In addition to your responses on computer-model-based and level-fee-based advice arrangements, do you anticipate making any other changes to how you provide investment advice services to 401(k) plan participants in light of DOL regulations recently promulgated under the Pension Protection Act (PPA)? 60% 56% 50% 43% 40% 30% 20% 10% 1% 0% Yes, other changes in the service No changes in the service provision Unsure provision anticipated anticipated Note: n = 373. 401(k) Investment Education and Advice | ©SHRM 2010 16
    • Demographics: Organization Industry Industry Health care, social assistance (e.g., nursing homes, EAP providers) 15% Manufacturing—other 12% Services—professional, scientific, technical, legal, engineering 9% Government/public administration—federal, state/local, tribal 7% Insurance 7% Financial services (e.g., banking) 6% Educational services/education 6% Construction, mining, oil and gas 5% Retail/wholesale trade 4% Note: n = 472. Percentages do not total 100% due to rounding. 401(k) Investment Education and Advice | ©SHRM 2010 17
    • Demographics: Organization Industry (continued) Industry Other services (e.g., nonprofit, church/religious organizations) 4% Utilities 4% Real estate, rental, leasing 4% Arts, entertainment, recreation 3% Consulting 2% Services—accommodation, food and drinking places 2% Telecommunications 2% Transportation, warehousing (e.g., distribution) 2% Manufacturing—auto/auto-related 2% High-Tech 2% Biotech 1% Publishing, broadcasting, other media 1% Pharmaceutical 1% Association—professional/trade 0% Other 4% Note: n = 472. Percentages do not total 100% due to rounding. 401(k) Investment Education and Advice | ©SHRM 2010 18
    • Demographics: Organization Sector Privately owned for-profit organization 42% Publicly owned for-profit organization 24% Nonprofit organization 20% Government sector 11% Other 4% 0% 10% 20% 30% 40% 50% Note: n = 472. Percentages do not total 100% due to rounding. 401(k) Investment Education and Advice | ©SHRM 2010 19
    • Demographics: Organization Staff Size 40% 34% 34% 30% 21% 20% 10% 7% 4% 0% 1 to 99 employees 100 to 499 employees 500 to 2499 employees 2500 to 24999 25000 or more employees employees Note: n = 282 401(k) Investment Education and Advice | ©SHRM 2010 20
    • Demographics: Other Does the organization have U.S.-based Is organization a single-unit company or a multi- operations (business units) only or unit company? does it operate multinationally? Single-unit company: companies in 35% U.S.-based operations 74% which the location and the company are one and the same Multinational operations 26% Multi-unit company: companies 65% that have more than one location Note: n = 473 Note: n = 490 • 20% of organizations indicated that Are HR policies and practices determined by employees at their work location were the multi-unit corporate headquarters, by each unionized. work location or both? Note: n = 468 Multi-unit headquarters determines 61% HR policies and practices Each work location determines HR 2% policies and practices A combination of both the work 37% location and the multi-unit headquarters determine HR policies and practices Note: n = 329 401(k) Investment Education and Advice | ©SHRM 2010 21
    • SHRM Poll: 401(k) Investment Education and Advice Methodology • Response rate = 21% • Sample comprised of 578 randomly selected HR professionals from SHRM’s membership. • Margin of error is +/- 4% • Survey fielded July 20 – August 2, 2010 For more poll findings, visit: www.shrm.org/surveys Follow us on Twitter: http://twitter.com/SHRM_Research 401(k) Investment Education and Advice | ©SHRM 2010 22