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Fidelity myPlan Aims to Break Retirement Savings Inertia
According to Fidelity’s own research, nearly
three-quarters of individuals consider themselves
planners when it comes to such things as vacations,
birthdays and holidays, but when faced with something
less immediate such as finance planning, the number is a
far less robust 29%, with one quarter of Americans saying
they have a clear retirement plan in place today.
Fidelity’s myPlan product means to help investors and
plan participants stop procrastinating when it comes to
retirement planning by simplifying the process and
helping them over the initial barrier of getting started,
which 58% of Americans say is the most difficult part,
according to Fidelity research, and the biggest proponent
of why the Americans are saving on average 3.3% annually
for retirement.
The product is geared toward individual investors and
plan participants, but is also something else plan
sponsors can use to engage participants in retirement
planning, Abigail Johnson, president of Fidelity Employer
Services Company (FESCO) told PLANSPONSOR.com in an
interview. Johnson put at the head of Fidelity’s HRO and
retirement services business in May 2005, as part of a
major management shift at the company where her father
sits as chairman and chief executive officer (See Abigail
Johnson Moves to FESCO in Sweeping Fidelity
Reorganization
http://www.plansponsor.com/pi_type10/?RECORD_ID=29244
)
The first part of the free Web-based product is called
myPlan Snapshot, which gives the user a dollar estimate
of how much they will need to retire in just minutes by
asking only five questions that include monthly
contribution amounts, expected retirement age, and
preferred investment style.
The final figure comes in two variations, one if the
market performs at average, and the other if it has poor
performance. “It’s not a perfect [number], but it’s a
darn good one. It’s better than not having an answer at
all” said Ellyn McColgan, president of Fidelity Brokerage
Company, at a news conference Tuesday in New York City
held to punctuate the myPlan launch. The point, she
continued is to get individuals thinking and on the way
to planning.
The second part of the process is a revamped version of
Fidelity’s Retirement Quick Check, a more in-depth
step-by-step that helps users create an actual retirement
plan – a process that takes about 30 minutes.
A Lesson in Immediate Gratification
One reason why people put off saving for retirement is a
lesson is not only that financial planning seems too
complex to tackle, but also that the need to do so is not
immediate, said Brigette Madrian, a professor at the
Harvard University Kennedy School of Government and an
expert on employee savings behavior in employer-sponsored
plans, at the news conference.
“Retirement planning does not have the same urgency
as other complicated decisions,” such as mortgages, car
insurance and taxes,” Madrian said, explaining that
retirement planning lacks the same short-term deadlines
such as needed to move in to a house or meet the April 15
income taxes deadline.
If the Snapshot segment of Fidelity’s myPlan satiates the
affinity for immediate gratification, then Quick Check
moves a step farther, and actually takes individuals into
the planning stage. At least that’s the thought.