Financial Education More Important than Ever to Participants

May 13, 2009 ( - With the economy still uncertain and continued market volatility, Fidelity Investments said it is seeing higher levels of worker engagement and increased demand from employers and employees across the country for holistic financial guidance.

Fidelity’s data, based on more than 17,500 corporate defined contribution plans and 11.3 million participants, shows that nearly half of all plan participants contacted Fidelity about their workplace savings plans during the first three months of 2009. Additionally, according to a press release, Fidelity provided nearly 4,000 financial seminars attended by nearly 208,000 workers representing over 920 employers across the country during the first quarter.

Fidelity is also seeing an increased demand for live seminars held over the Internet, the announcement said.

Additionally, Fidelity said many participants are also using its retirement planning tools to help them better understand their risk tolerance and plan for retirement. In the first quarter alone, 236,000 participants used one of Fidelity’s planning tools either on their own or with the assistance of a Fidelity representative on the phone or via a live Web chat.

Overall, nearly half of the participants who attended a seminar or experienced a planning session with a representative took some action either by rebalancing their account or increasing their contribution to their workplace savings plan.

Data on Fidelity clients' defined contribution plan participants shows that 97% of active participants continued to make contributions in the first quarter of 2009. On average, workers contributed $1,700 of their pre-tax income in their workplace savings accounts in the first quarter of 2009, down slightly year-over-year ($1,860). With a majority of employers also continuing to contribute to their employees' workplace savings accounts, according to a Fidelity press release, total contributions totaled $2,780 on average in the first quarter of 2009, a slight decrease from $3,080 in the first quarter of 2008.

Exchange levels in the first quarter were down from the fourth quarter of 2008 and also from year-over-year levels. About 5.2% of participants in the first quarter made an exchange, down from 6.1% in the fourth quarter of 2008 and 6.2% during the first quarter of 2008.

Twenty-five percent of new contribution dollars are being invested in blended options, a vast majority of which are lifecycle options, the announcement said. More than 51% of new contributions to 401(k) plans are going into equities, including domestic, international and company stock. In total, participants are directing nearly 69% of their new contribution dollars into equities (domestic, international, company stock and the equity portion of blended options).

The remaining quarter of new contributions are being invested in more conservative short-term, stable value or fixed-income investments, up slightly from the previous quarter.

In addition, auto-enrollment has been adopted by over 16% of plans, led by larger plans, covering nearly 50% of the participant base. Over 50% of plans with 25,000 participants or more have adopted auto-enrollment.

Employers also increased their adoption of Roth 401(k) in the first quarter of 2009 to 14.7% of plans at the end of March 2009, up from 13.2% at the end of 2008.