Fidelity’s making it easier to plan for retirement with their simplified retirement calculators.
All you have to do is answer 5 questions.Â
Fidelity Investments said yesterday it will simplify its online retirement planning tools, citing both its own experience and academic research supporting this conclusion: People are lazy.
“Americans just love to procrastinate when it comes to planning and saving for retirement,” said Fidelity vice chairman Robert L. Reynolds during a presentation in New York yesterday, carried on a conference call.
He cited a company survey that found just 29 percent of 1,511 working people considered themselves good at financial planning.
The new tools and a forthcoming ad campaign aim to help people start saving and “get them into the pool, even if it’s a wading pool” at first, he said in a later interview.
Among other things, the law makes it easier for financial companies to offer advice directly to workers on how to save for retirement, and makes it easier for employers to enroll workers automatically into savings plans when they are hired.
With an eye on these changes, other large investment organizations including Vanguard Group Inc. and TIAA-CREF also have added online calculators and tools to draw in more retirement savings.
By raising savings rates, investment companies also aim to increase the assets they manage and in turn their profits.
Reynolds and other Fidelity executives said their new online guidance program, “myPlan,” will go live in two weeks and will show users a simple total amount of money they must save to support the retirement they envision based on five questions.
Users don’t have to be Fidelity customers, and the site also will have tools to create a broader retirement plan in 30 minutes, Fidelity said.
That’s a problem, as traditional pension plans are in decline, said Abigail P. Johnson, president of Fidelity’s corporate services division and daughter of company chairman Edward C. Johnson III, in rare public comments.
Yet there are still 22 million people who don’t participate in corporate savings plans they are eligible for, she said, because they face other demands on their cash and may be confused by too many choices.
“People don’t want to give anything up; they only want to act when there’s a sense of urgency; and all those investment choices make it harder to take action,” she said.
Fidelity also stocked the New York event with a trio of economists from Harvard, the Massachusetts Institute of Technology, and the University of California who have done research into the ways people decide how much to save or spend.
Their field, know as behavioral economics, tries to explain why individuals don’t always act in obvious or rational ways.
For example, a chief obstacle to savings is that it doesn’t produce immediate tangible benefits, said Harvard economist Brigitte Madrian.
Another panelist, MIT’s Dan Ariely, said in a later interview that he and the others were paid to appear, but did not play any direct role in developing Fidelity’s products.
-Adam
Fidelity will simplify its online tools (Boston Globe)
Call it savings for slackers. Fidelity Investments said yesterday it will simplify its online retirement planning tools, citing both its own experience and academic research supporting this conclusion: People are lazy.
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