Whadaya know? Financial education (or a lack thereof) strikes again.
Some employees love managed accounts and some don’t—the difference is in the awareness. Fidelity Investments found that to know managed accounts is to use them. Here are the highlight:
- Fully 48 percent of 401(k) plan participants enrolled in managed accounts through Fidelity said that the ongoing monitoring of their investments was one of the most valuable things about the offering.
- Another 44 percent said that the annual review was essential.
- Of these, 38 percent said that the ongoing management was beneficial, as well.
On the flip side, Fidelity’s research showed that those who don’t use managed accounts say it’s because they need more education on why the offering could be right for them. Here are the lowlights:
Nearly 39 percent of those who don’t use a managed account say they lack understanding of what is being offered for the benefit, and 25 percent said that not knowing enough about them is a major barrier to adoption.
However, once it’s explained what a managed account is and how it offers ongoing professional management of their retirement accounts:
- 54 percent say that the offering would be relevant to their needs.
- 52 percent said that they would find the service useful.
As employers look to broaden adoption of and increase understanding around workplace managed accounts, below are best practices for educating employees:
- Engage, engage, engage! Proactively engage employees on the benefits. Provide information to help them understand how managed accounts provide an investing approach based on their personal situation. Work with your workplace managed account provider to offer awareness campaigns to educate, create dialog and encourage them to seek help.
- Again, again, again! Be sure to remind employees about the value of your managed account offering by providing education periodically and in multiple forms. As they say, timing is everything and frequent communication will increase the likelihood that your employees will engage.
- Get them early! The earlier the employees get on track with both saving and appropriate investing, the likelier they are to build the wealth and savings they will need throughout their retirement.
“The good news is that awareness and education around managed accounts helps drive overall participant engagement and action,” said Chad Elliott, senior vice president of Fidelity’s workplace managed account business. “In general, participants who respond to the educational programs are more likely to make a change to their asset allocation, increase their savings rates and review their retirement plan.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
