Driving participation in 401(k) plans

Oct 23, 2013 @ 12:00 am

Runtime: 3:09

Kevin Crain, senior relationship executive at Bank of America Merrill Lynch, on how 401(k) plans are working to provide clearer choices and more professional advice.

Video Transcript

So the first thing I have to say about for 401(k) is we actually are strong believers that they have a very primary role in retirement savings for individuals and their corporate surrounding. Individuals in 401(k)s, we believe, still have an ability to accumulate a great amount of assets. If you look at the annual contribution, amidst that they can contribute to as well as if you're over the age of 50, they catch up contribution. Employers now having reestablished matches from where they were pre deferential crisis and in many cases these employers even begin to enhance the matches. There remains a significant accumulation opportunity for individuals in 401(k)s. The other trend, I think, that's happening with it, is it's also allowing, [unk] are allowing to give individuals more professional help and advice. And I think people are accepting of that. They're staying with it. They want it. Employers are also saying they want that in their plans. So I think finally there's a recognition that it's hard for an individual to be in themselves a professional asset manager. So if they can get help, get advice on both savings and investing, use things like manage account programs professionally manage the assets that they would like. Even if not that, use targeted funds which are more simplified diversified structures. On the investing front they are getting the assistance individuals need, so they have diversified well performing investments throughout their career. The corporation's, and I think the corporation's in concert with the plan providers actually are doing a great deal today to more simplify the plan. In the past, the 401(k) plans became robust but almost overly complex, an example, too many investment options. So now that a number of investment options are beginning to narrow they're beginning to go down with these easier solutions like a match counts for the more charge it could take, easier utilization programs. So instead of what happened in the past of robust but overwhelming communications programs the individuals being given, just automate to behavior when they join the company. Get them enrolled, automatic enrollment. Get them to be in the-- increase their contribution's automatic increase. Then as I said, help in advice programs as so as they've started to save and see some accumulation of balances. Where can they get more help about how much more they should save? You know, more professional investment support. And beyond that the education programs become more targeted to specific events for people rather than generalized. So plans sponsors and ourselves are targeting, again, when people are turning age 50, go after those people just in catch of contributions. If people are not maximized in the match give it targeted program to tell them specific for them. You can contribute a little bit more and maximize the match. If they're-- if they're not saving enough to hit an income call, retirement income call, again communicate to them very specifically what do they need to do to do it. So I think more targeted, more action involved, more personalized communications are much more the norm now and are far more in pack form once you're driving [unk].

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