In fact, according to a press release, an average of 60% stayed with the program. Financial Engines also notes that automatic enrollment into managed accounts also had an effect on the overall health of the employer retirement plan.
The portfolios of participants that were automatically invested into managed accounts had higher expected growth rates after Financial Engines made allocation changes to their portfolios, according to the firm. On average, these allocation changes were projected to increase the expected annual growth of participant portfolios by 91 basis points annually, net of fees.
In an evaluation of plan sponsors that implemented automatic investing for nearly 80,000 existing plan participants, Financial Engines found that 40% decided to manage their 401(k) accounts themselves after a personalized 60-day communication campaign. Participants who chose to manage their 401(k) accounts on their own tended to have higher salaries, higher balances and higher savings rates.
Of the 225,000 participants enrolled in the Financial Engines managed accounts program as of December 31, 2007, more than 20% were automatically invested.
As of March 31, 2008, the average annual account management fee that participants pay within these plans is 27 basis points – and, when combined with the underlying fund fees that these managed accounts members pay, the average total “all-in” fee is 63 basis points, according to Financial Engines.
align="center"> Managed Account Members (Participants remaining in managed accounts)
align="center"> Non-members (Participants declining auto-investment in managed accounts)
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