Schwab Retirement Advice Indicators Reveal Savings Rates Continue to Rise Among Advice and Managed Account Users in 401(k) Plans
29 April 2005 - 12:30AM
PR Newswire (US)
Schwab Retirement Advice Indicators Reveal Savings Rates Continue
to Rise Among Advice and Managed Account Users in 401(k) Plans
Adoption Rates Increase in Every Age Group, Advice Appeals to Women
SAN FRANCISCO, April 28 /PRNewswire-FirstCall/ -- New demographic
data from Schwab Corporate Services, a leading provider of
workplace financial benefit services, show that 401(k) participants
enrolled in advice with managed account services save more than 10
percent of their eligible income in their 401(k) plan, nearly 50
percent more than the national average of seven percent.* Schwab
makes personalized advice with managed account services available
at no additional cost to participants in 401(k) plans serviced by
Schwab Retirement Plan Services, Inc.** Schwab's Retirement Advice
Indicators also reveal that participants are signing up for advice
regardless of salary or account balance, but women are more likely
than men to take advantage of advice. Advice users represent
multiple age groups, with equal numbers of participants aged 26-55.
Schwab has introduced the Retirement Advice Indicators as a means
of tracking behavior based on the age, salary, account balance and
gender of thousands of advice users. "Our mission is to help every
participant prepare for and enjoy a long retirement. The more we
know about them, the better we can meet their needs," said Trish
Cox, chief operating officer, Schwab Retirement Plan Services. "We
are very pleased to see such broad adoption among employees at
every stage of their careers." Advice users are continuing to
increase their savings rates, which is a critical component to
achieving retirement savings goals. In the first quarter, the
average savings rate increase was eight percent. For example a
participant that was saving five percent of eligible income before
accepting advice is now saving 13 percent of eligible income. Such
dramatic increases can significantly impact the amount of money
available for retirement. Overall average savings rates for advice
users reached 10.3 percent, up from 9.6 percent at the end of 2004,
and well above the average for all Schwab 401(k) participants (7.15
percent) and the national average (7.0 percent). Considerably more
women than men are adopting advice (54 percent vs. 39 percent).
"When it comes to retirement planning, women are not afraid to ask
for directions," said Cox. "Women are getting more involved in
their own retirement planning, and we're encouraged to see that
they are actively taking control of their financial future." While
women outnumber men in terms of seeking advice, Retirement Advice
Indicators show positive adoption rates for every age group between
26 and 65 regardless of gender. "More than half of those enrolled
in advice are age 45 or younger, which is great news given the
challenges of encouraging younger participants to save for
retirement. This demonstrates the value of removing barriers,
especially the barrier of cost, and of letting people receive
advice in the way they find most comfortable, be that in person,
over the phone or on the Web," said Jim McCool, president, Schwab
Corporate Services. McCool also noted that most participants using
advice have salaries below $60,000 and 43 percent have 401(k)
account balances below $25,000, further demonstrating the demand
for advice among all participants. Participants have access to
personalized advice including managed account services either
online, by phone or in person, including recommendations specific
to the core investment fund choices available in their retirement
plan and specific recommended savings rates. Managed account
services include ongoing monitoring and automatic rebalancing of
participant accounts to maintain proper asset allocations. The
advice and managed account features are provided by a third party,
GuidedChoice(TM), Inc., an innovator in the development and
delivery of investment advice.*** More than 275 retirement plans
have joined Schwab's advice with managed account services program
since it was launched in early 2004. For more details on the
results of Schwab's Retirement Advice Indicators, go to:
http://www.aboutschwab.com/schwabcorp/sch_ret_advice_data.html .
About Schwab Corporate Services Schwab Corporate Services (SCS)
provides services to retirement plans, retirement plan sponsors and
participants through Schwab Retirement Plan Services, Inc. (SRPS),
The Charles Schwab Trust Company (CSTC), Schwab Retirement
Technologies(R), and Charles Schwab & Co., Inc. SCS also
provides equity compensation plan services and other financial and
retirement services to corporations and executives. SRPS provides
recordkeeping and related services with respect to retirement
plans. CSTC, a California state-chartered trust company, provides
trust and custody services with respect to benefit plans. Schwab
Retirement Technologies is engaged in developing and licensing
proprietary retirement plan recordkeeping systems to independent
third party administrators. Charles Schwab & Co., Inc. (Member
SIPC) is a registered broker/dealer, offering the Schwab Personal
Choice Retirement Account(R) (PCRA), as well as other brokerage and
custody services to its customers. These entities are affiliates of
each other and are wholly owned subsidiaries of The Charles Schwab
Corporation. Total client assets in employer-sponsored retirement
plans at Schwab equaled $129 billion at the end of March 2005. The
Charles Schwab Corporation (NYSE / Nasdaq: SCH), through Charles
Schwab & Co., Inc. (member SIPC), U.S. Trust Corporation
(member FDIC), CyberTrader(R), Inc. (member SIPC) and its other
operating subsidiaries, is one of the nation's largest financial
services firms. (0405-3610) *National average is seven percent
according to National Defined Contribution Council; Defined
Contribution Market Insights 2003. Schwab data based on
approximately 2800 participants enrolled in advice and managed
account programs. **"At no additional cost" means that there is no
cost for service outside the fees paid to Schwab Retirement Plan
Services, Inc. (SRPS) and Charles Schwab & Co., Inc.
(CS&Co.) for recordkeeping and related services, including
trustee and custodial fees paid to The Charles Schwab Trust
Company. ***The GuidedChoice(TM) service and the investment advice,
including the managed account services, are formulated and provided
by GuidedChoice Asset Management, Inc. (GuidedChoice). GuidedChoice
is not affiliated with, nor is it an employee or agent of,
CS&Co. or SRPS. The GuidedChoice service is available to
participants enrolled in plans that use the recordkeeping and
related services of SRPS. Availability subject to regulatory
requirements. Plan sponsors must elect to make the GuidedChoice
service available. Availability may be limited due to plan type and
plan provisions. Participant access to the GuidedChoice service is
facilitated through SRPS's affiliate, CS&Co. Neither CS&Co.
nor SRPS supervises, makes recommendations with respect to, or
takes responsibility for monitoring the advice provided to
participants by GuidedChoice. These entities are affiliates of each
other and are wholly owned subsidiaries of The Charles Schwab
Corporation. DATASOURCE: Charles Schwab CONTACT: Mike Peterson,
+1-330-908-4334, or , or Lindsay Tiles, +1-415-667-3997, or , both
of Charles Schwab Web site: http://www.schwab.com/
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