Fidelity adds layers to its managed account offering

Plan sponsors looking to help employees save more for retirement have a new product to consider.

Fidelity Investments added a new functionality to its managed account offering, the financial services firm announced Tuesday. Called Fidelity Personalized Planning & Advice, the product helps participants create, implement and track financial plans that are based on their own personal financial situations.

The new product is a result of growing interest in managed accounts — both among employers and defined contribution plan participants, Fidelity says. Managed accounts take advantage of the investment options available in an employer-sponsored plan but are overseen by a professional money manager who will allocate and build an account for the plan participant.

According to Fidelity, 5,300 employers have already adopted a Fidelity managed account option in their 401(k) or 403(b) plan and that number continues to grow every year. In 2017, 750 employers adopted managed accounts for their workplace plans.

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In addition to clients, Fidelity has seen tremendous growth — a five-fold increase — in the last five years in the number of employees who have adopted managed accounts, says Sangeeta Moorjani, head of product, marketing and advice for Fidelity’s Workplace Investing business.

“If you as a plan sponsor are committed to helping your plan participants, you have to design a plan that takes into consideration all types of employees,” Moorjani says. That includes do-it-yourselfers and those who want to set it and forget it in a target-date fund or managed account.

Plan participants who take on managed accounts more than double their savings rate, she says.

The new offering from Fidelity allows employees to receive the right allocation for them, Moorjani says. Employers who already offer a managed account option will automatically get the additional features offered by Personalized Planning & Advice at no extra cost. Employees already enrolled in managed accounts don’t have to re-enroll in the service. The program is also available to plan sponsors adding a managed account to their plan.

“Our intent is to help people make decisions and reduce the friction that is slowing them down,” Moorjani says.

Plan participants will get help crafting a financial plan that not only includes how best to save for retirement, but also integrates other investment goals such as putting a down payment on a house or setting up an emergency fund. They also will get professional, personalized investment management and ongoing service including annual checkups, reminders and information that addresses their specific investment needs.

“Over three-quarters of our clients have indicated they would like a financial expert to weigh in on their financial decisions,” Moorjani says. “Regardless of their financial situation or level of affluence, Fidelity recognizes that investors across the board are looking for more help, and Fidelity Personalized Planning & Advice is one of many offerings designed to provide this help to a broad range of investors.”

The fee structure varies for managed accounts. On average, plan participants will pay an advisory fee of 50 basis points or half a percentage point. That equates to $50 on a balance of $10,000. Some plan sponsors may choose to pay that fee or discount the fee for their workers.

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