Invesmart Survey Reveals Strong Interest in Participant Advice; Roth 401ks
PITTSBURGH, PA, October 31, 2005 -- Offering 401k participants investment advice and telephone access to a registered investment advisor are the retirement plan services most important to employers, according to the 2005 Client Survey conducted by Invesmart, Inc., the national retirement financial services firm. The Invesmart survey also showed that employers have a strong interest in adding a Roth 401k feature to their plan next year.
"Our clients are demonstrating clear concern for increasing the effectiveness of the retirement plans they offer their employees," said David Gray, Service Vice President & Regional Director of Invesmart. "We support and applaud their efforts to help workers save more and invest wisely now to create a financially secure retirement later."
Offering participant advice and telephone access to a registered investment advisor were very important to nearly 65% of the respondents, and topped the list of service priorities. Providing a personalized retirement income gap analysis to participants ranked a close second, with 60% of respondents saying that was very important. Third was providing recommended savings rates and automatic deferral increases, which was important to 59%, followed by the option to delegate account management to an investment professional, which was important to 55%.
Pro-Roth 401k Sentiment High
In addition, when asked about their level of interest in offering a Roth 401k plan next year, 44% said they were interested, compared to 31% who said they were not. Roughly 25% said they did not know enough about the Roth 401k to decide. With Roth 401ks, participants invest after-tax dollars through payroll deductions. Investment returns compound in the account on a tax-free basis, and participants owe no tax on amounts withdrawn at retirement. There are no mandatory withdrawals, either, provided the participant rolls the Roth 401k into a Roth IRA at retirement. Roth 401ks are due to take effect in 2006.
Invesmart offers various levels of advisory service through its participant-focused RightPath offering, a plan structure that presents participants with a retirement plan gap analysis at enrollment and offers them the option of using Invesmart Advisors, Inc., a registered investment advisor, to manage their account for them. RightPath is now used by 130 plans representing more than $500 million in assets. Fifteen thousand employees have either been converted or are in the process of converting to RightPath.
Invesmart's 2005 Client Survey, conducted on line in August drew responses from 422 sponsors of 401k plans. Seventy-eight percent of respondents have plans with more than $1 million in assets, and nearly 50% take advantage of Invesmart's advisory services in addition to the company's other administrative and recordkeeping services.
About Invesmart
Invesmart, Inc. is a national full-service retirement financial services firm. Invesmart combines one-on-one, personalized service and technology to help financial service intermediaries advise companies of all sizes in establishing and administering retirement plans. Invesmart provides investment advisory services through Invesmart Advisors, Inc. and brokerage services through Invesmart Securities, LLC, member NASD. Invesmart, Invesmart Advisors and Invesmart Securities are wholly owned subsidiaries of Invesmart, Inc., a Delaware corporation. Invesmart Advisors' relationship as co-fiduciary to the plan and/or to the participant is governed by the terms and provisions of a contractual agreement executed by Invesmart Advisors and the plan sponsor or the participant. Invesmart, Inc. and/or its affiliates do not retain any fund-related reimbursements for any of its investment advisory programs and do not offer any proprietary investments. Invesmart represents 4,000 (DC) retirement plans. Headquartered in Pittsburgh, Pennsylvania, the firm has 20 sales and service locations. Visit Invesmart's website at www.invesmart.com.
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