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Where Do you Go for Financial Advice?
During the recession, participants tended to maintain advice services, with 98% staying in the program, said Kevin Crain, head of institutional retirement & benefit services for Bank of America Merrill Lynch. Continued usage of advice features was not the only thing that remained on the upside in the recession. Since 2009, which many view as the lowest point in the recession, 401(k) contribution patterns positively show a widening gap between the percent of plan participants starting/increasing their savings versus those stopping/decreasing, according to the report. “The opt-out rates stayed very consistent [during the recession],” Crain said. Overall, Crain said he finds it encouraging that participants want to save for retirement—they just need help doing it. Advisers should discuss solutions with sponsors that can increase retirement success, Crain added. They can encourage sponsors to set up the plan with an advice service, a higher initial deferral rate than 3%, enrollment for all eligible employees in the plan rather than just new hires, and automatic enrollment paired with automatic escalation. The report is available at http://www.benefitplans.baml.com/Publish/Content/application/pdf/GWMOL/2Q2012WellnessScorecard.pdf.
During the recession, participants tended to maintain advice services, with 98% staying in the program, said Kevin Crain, head of institutional retirement & benefit services for Bank of America Merrill Lynch.
Continued usage of advice features was not the only thing that remained on the upside in the recession. Since 2009, which many view as the lowest point in the recession, 401(k) contribution patterns positively show a widening gap between the percent of plan participants starting/increasing their savings versus those stopping/decreasing, according to the report.
“The opt-out rates stayed very consistent [during the recession],” Crain said. Overall, Crain said he finds it encouraging that participants want to save for retirement—they just need help doing it.
Advisers should discuss solutions with sponsors that can increase retirement success, Crain added. They can encourage sponsors to set up the plan with an advice service, a higher initial deferral rate than 3%, enrollment for all eligible employees in the plan rather than just new hires, and automatic enrollment paired with automatic escalation.
The report is available at http://www.benefitplans.baml.com/Publish/Content/application/pdf/GWMOL/2Q2012WellnessScorecard.pdf.
Corie Russelleditors@plansponsor.com