The new level of service comes in response to DOL Advisory Opinion 2001-09A, also known as the SunAmerica Opinion (see DoL Lowers Another Advice Barrier ), issued last December. In that opinion, the Department of Labor sanctioned the offering of investment advice by a financial institution for a fee, so long as it was based on the computer programs and methodology of a third-party, independent advisor, thereby eliminating conflicts of interest.
Under the new relationship, unveiled today, CitiStreet Advisors, LLC will provide advisory and fiduciary services, while Financial Engines serves as the independent sub-advisor and provider of the advice technology platform.
CitiStreet has been providing call center-delivered advice based on workstations powered by Financial Engines for over three years, according to the firms. However, until the DoL Advisory Opinion, to avoid any conflicts of interest, CitiStreet limited that advice to five level-fee index funds.
CitiStreet will deliver advice on existing plan investment options both online and through its call center advisors – and has also taken steps to enhance onsite guidance and education workshops to include face-to-face advice for clients who want more high-touch advice delivery.
Through the alliance with Financial Engines, CitiStreet will be able to broaden its relationships with employer clients, potentially acting as the primary advisor on all investment portfolios for plan participants. Additionally, CitiStreet could continue to provide these services post-retirement or following the move to a new employer.
CitiStreet claims that callers to the CitiStreet Advice Account increase savings from an average of 2.7% to an average of 6.8%, an increase of more than 150%, while Financial Engines’ forecasts show a caller’s chance of reaching retirement goals nearly doubles.
CitiStreet services include:
- personal assistance with investment selections and transactions from a professional advisor over the core holdings in the retirement plan
- ongoing tracking and monitoring of account performance
- periodic follow-ups for review
- a total portfolio view of all accounts
- and continuous portfolio rebalancing services.
See also: Going Nowhere Fast