CitiStreet Surveys Show Investment Advice Spurs Action Among Retirement Plan Participants; Savings of Those Using Advice Are 14
May 03 2006 - 11:08AM
Business Wire
Benefit plan participants who use investment advice are generally
middle-income wage earners with modest savings, but they tend to
take significant, beneficial actions upon consulting with an
advisor, such as saving 140 percent more than those who do not get
advice, according to data from CitiStreet surveys. The surveys(a)
show that in addition to savings contributions increasing across
the board, 80 percent of the participants making their initial
contact with a CitiStreet advisor set retirement goals for the
first time. Among other findings: -- 78 percent identified
themselves as beginners or somewhat experienced investors -- 93
percent felt they better understood their retirement goals after
speaking to an advisor -- 98 percent felt they better understood
their benefit plan -- 85 percent said they would strongly recommend
advisory services to their co-workers -- 75 percent said they felt
more confident in meeting their retirement goals The average age of
those using advisory services is 46, with an average account
balance of $39,000 and a salary of $45,000, which approximates the
median family income in the nation. Ray Martin, president and CEO
of CitiStreet Advisors, LLC, said the surveys indicate that the
advisory service is reaching a large number of workers who could
not obtain such services at a reasonable cost outside their plans.
"Many higher income individuals already have their own investment
advisors, financial planners or brokers, who typically are not
interested in doing business with the average retirement plan
participant. We designed our advisory program to appeal to all
levels of participants, at reasonable cost throughout their working
lives and into retirement," said Martin. "It is part of
CitiStreet's commitment to providing what we call
Direction-for-Life(TM)." The surveys also showed that 70 percent of
participants using advice have reviewed their retirement plan with
a CitiStreet licensed advisor within the past year, and the average
participant used the service 2.4 times per year. Martin said that
the use of advisory services has led to a savings rate 140 percent
higher among participants using the advisory service, as compared
to those who do not seek advice. He added that per-participant
participation among plans offering advice doubles on average from
about 15 percent the first year the service is offered to nearly 30
percent by the end of the third year. Also, the data indicate that
advised participants invest in more funds, have investment
allocations that are more suited to their number of years to
retirement and have retirement accounts that are less concentrated
in company stock versus the participants who do not use the
service. Martin also noted that high-value features such as
investment advice, managed accounts, stable value funds and
institutionally priced immediate annuities are only available at
institutional costs to individuals through an employer benefit
plan. "This suggests that retiring employees should think twice
before they decide to transfer assets out of the plan and give up
those significant advantages," said Martin. (a) The survey data as
it relates to participant behavior with respect to savings and
diversification improvements was gathered by data mining; observing
account activity for participants who use the CitiStreet Advisor
Service and comparing the activity to that of participants who do
not use the service. The satisfaction survey results were gathered
from individuals that complete a retirement assessment with a
CitiStreet investment advisor representative who subsequently
completed and mailed a survey card. All results were compiled from
data gathered as of Dec. 31, 2005. About CitiStreet CitiStreet, one
of the largest global benefits delivery firms in the United States,
is headquartered in Quincy, Mass. CitiStreet has 3,000 employees at
offices in Somerset, N.J., Jacksonville, Fla., Lewiston, Maine,
Boston and field offices around the nation. It also has a division,
CitiStreet Australia, with offices in Sydney, Brisbane and
Melbourne. CitiStreet serves more than 10 million participants and
administers approximately $200 billion in assets in the United
States for defined contribution, defined benefit and health and
welfare plans of corporate, government, health care, Taft-Hartley
and not-for-profit organizations. It also serves more than 1
million participants and administers about $15 billion in assets
outside the United States. CitiStreet is a 50/50 joint venture
between State Street Corp. (NYSE:STT) and Citigroup (NYSE:C). For
more CitiStreet information, visit the Web site at
www.citistreetonline.com.
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