Fidelity Credits Financial Education, Better Messaging for Record Nest Eggs

By Dan Kadlec

February 17, 2017

Retirement savers are in the best shape in recent memory—and that is in large part due to stepped up workplace financial education efforts, according to a report from Fidelity Investments.

Savers are putting away more money, opening more retirement accounts, and seeing bigger balances than has been the case in years, according to the report. This is the kind of ringing endorsement that should prompt companies around the world to invest more in the financial know-how of their employees.

The average 401(k) balance in Fidelity-administered plans rose to a record $92,500 at year-end, up $4,300 from the previous year. The average IRA balance at Fidelity was $93,700, up $3,600 from the previous year.

The average contribution rate to Fidelity 401(k)s reached 8.4% in the fourth quarter, the highest level in more than eight years. Over the past 12 months, employee contributions plus employer match added a record $10,200 to the typical account.

“This is the next frontier of workplace financial education,” says Heather Shultz, vice president of participant marketing at Fidelity. “We are engaging the unengaged. We are relevant again to the people in our plans.”

Over the past year, Fidelity has been sending out simpler, more direct and more individualized messages to 401(k) participants around enrollment, saving and investing. The percentage of people that received these targeted messages made some sort of adjustment at twice the rate as those that received general messages.

This means more workers are doing things like checking their balances, changing contribution rates, changing their asset mix, and logging into advice tools. Shultz says targeted email messages have “an unheard of” 50% open rate and that those who take some sort of action as a result are up 40% the past year.

Previously, messages were more benign and offered generic tips and broad advice like, it’s important to save, Shultz says. Now the messages are more direct, asking whether you are on track for your goals or investing too conservatively or aggressively—and include directions on where to find answers among Fidelity’s range of tools. On the basic question of asset allocation alone, Fidelity has 50 unique videos it channels to plan participants based on their age, income, goals and investment style.

Fidelity reports a surge in workers taking advantage of these financial education programs. Attendance at live web sessions is up 52% and on-demand seminars, up 62%. Since launching its interactive Money Checkup in June, Fidelity has seen more than 300,000 plan participants visit the site, which helps people understand things like whether they are saving enough and how much risk is appropriate.

Fidelity has a site to help people living paycheck to paycheck eliminate complexity and stress in day-to-day financial choices; one to help Millennials make big financial decisions for the first time; and one to help people who are more financially established make smart decisions to grow their savings, pay down debt, and prepare to retire.

Relevant, timely, targeted messages are making all the difference—in large part because Fidelity is also reaching account holders through text, mobile friendly, digital communications, and its own website and that of employers.

“We need to reach people where they are,” Shultz says. This approach has re-engaged one in seven account holders that had been out of touch for at least a year, she says. Companies increasingly embrace financial wellness programs. It is time for them to also embrace clearer and more direct communication. More on workplace financial education:

Your Company Must Offer A Financial Wellness Program

Workplace Financial Education Triggers 401(k) Enrollment

Workers Want Better Financial Education with 401(k)s

Posted in Adults on February, 2017