An important part of the program is the Fidelity Income Strategy Evaluator (http://www.fidelity.com/incomestrategy), according to the announcement. It is designed to help investors nearing or early in retirement assess their income needs and structure a portfolio and withdrawal strategy to help ensure their specific sources of retirement income and expenses are aligned throughout retirement.
The evaluator is offered online to investors and incorporates a broad range of Fidelity and non-Fidelity income and investment products as the building blocks for its suggested income strategies.
The evaluator first focuses on understanding each investor’s financial situation and preferences, then helps investors identify any cash flow gaps in the short-term, or throughout their planned retirement, by comparing their expected sources of income with planned retirement expenses – both essential and discretionary. The investor is also asked to think about his or her expectations and priorities for income in and throughout retirement.
Using all of these investor inputs, the evaluator attempts to create several strategies for generating the desired stream of income for an investor to consider. The baseline strategy, called the Fidelity Target Income Mix, is an investment combination that seeks to provide efficient use of the investor’s retirement savings for his or her situation. Alternative strategies also are provided to help address investor preferences so they can better understand the potential benefits and tradeoffs of one income mix relative to another. Each strategy then leads to a model portfolio of products that may include a mix of stocks, bonds and cash, as well as annuities. This approach enables the investor to see how retirement assets can work together to help withstand market volatility and down markets over time.
The evaluator also provides editing capabilities to allow investors to modify the proposed strategies and substitute other retirement income products they might prefer, such as bond ladders, target date and asset allocation funds, managed accounts, and fixed and variable annuities into the strategy. At the end, each investor will receive a plan of action for generating retirement income from their retirement savings, including a rationale for the overall strategy that includes the products modeled.
Fidelity said the new program kicks off with a 30-day, coast-to-coast, education and investor engagement initiative in which Fidelity will invite investors and workplace plan participants to attend one of 200 free, live educational events and seminars hosted by Fidelity at local Fidelity branches, regional sites, employee worksites and on the Web.