Press Release

In Wake of 'Stock Shock,' New Survey Shows 80% of Americans Want More Active Role in Managing Their Retirement Investments

HARTFORD, CT, September 23, 2002 -- After weathering a year in which a volatile stock market played havoc with their retirement portfolios, American workers are primed to take a more active role in shaping their own financial futures. Employees, according to a new workplace survey, remain considerably more bullish than bearish about the stock market, but are looking for more and better resources to help them make informed investment decisions regarding their retirement security.

In the new survey by CIGNA Retirement & Investment Services, 80% of employees said they intend to be more involved in managing the investments in their workplace-provided retirement programs. Fifty-eight percent plan to change their investment strategies if their retirement portfolio balance is lower at the end of 2002 than it was at the beginning of the year - an increase of more than 10% from responses to a similar survey question a year ago.

At the same time, the survey found that employees still trust their own employer or retirement plan provider as their primary resource for investment information and assistance. But a large majority of workers want their employers to provide more investment education, communication, guidance and financial-planning tools to help them better manage their workplace portfolios.

"When it comes to planning their financial future, American workers don't want to sit passively in the back seat watching the world go by - they want to take the wheel," said John Y. Kim, president, CIGNA Retirement & Investment Services. "Employees clearly want to play a more active role, and they want their employers to offer the information and resources to help them steer a more informed course in managing their retirement portfolios." The second annual Workplace Report on Retirement Planning - entitled "The Workplace Investor: Taking Control" - sampled opinions from 750 employees and 200 employers nationwide.

Among the 58% who foresee a change in their investment strategies:

• 19% say they will save a higher percentage of their salary;
• 13% say they will invest in more aggressive assets;
• 20% say they will invest in more conservative assets; and
• 6% say they will stop contributing to their 401k plan.

Employees Respond to Volatile Market with Optimism

The survey also found that employees are more bullish than bearish about current economic trends - and are more likely to remain engaged in the market rather than flee because of present volatility:

• Two-thirds (66%) described themselves as either bulls (meaning they are confident and believe the market will rise) or hawks (meaning they are paying close attention and waiting it out);
• Just one in four (24%) characterized themselves as bears (they are not confident and believe the market will fall) or ostriches (they have their heads in the sand and just don't want to know).

Overall, the survey found that workers are decidedly more upbeat about the future of the market than they are pessimistic:

• 75% think the market will improve by the end of the year;
• 17% expect dramatic improvement;
• 58% say it will improve slightly.

The Workplace Investor: "I can do Better"

In addition, survey respondents increasingly are holding themselves accountable for the actions they take in managing their workplace investments:

• Of those contacted, 67% of employees admit they have room for improvement in planning for their retirement, giving themselves a "B" grade or lower;
• At the same time, 66% say they will do a better job of diversifying their assets across a range of investment options;

On the whole, employees expressed interest in becoming more informed about the investment options available to them.

Employees to Employers: "Lend a Hand"

It is within this context - cautious optimism about the economy coupled with a firm resolve to move from passivity to action - that employees are looking to their employers for financial guidance to realize their retirement-planning goals. To that end, they state clearly that they want their employers to make available a wider range of financial-planning solutions:

• 89% would welcome personalized financial planning advice (specific information on investment decision making) from their employers;
• 83% would like their employers to offer more investment education and information tailored to meet personal employee needs;
• 82% think their employers would do well to offer more information about managing stock purchase plans or stock options;
• 69% would be in favor of their employers offering a range of banking products through the workplace;
• 65% would value workplace-based college funding programs (529 plans).

Currently, only 31% of employees give their employer an "A" grade when it comes to assistance in helping workers plan for a secure retirement, while 38% of employees give their employer a grade of "C" or lower. A majority, 55%, think their employers generally could do a better job of responding to questions about retirement planning.

Younger Employees More Skeptical, Harder to Reach

The survey also revealed that the need for employers to step up outreach and awareness efforts around financial planning is especially relevant for workers just getting started in their careers. In the study, younger employees reported they were less likely to be aware of financial services or options available to them as part of their employee benefits package. While nearly half of older Baby Boomers say they have access to specific investment information tailored to their needs, only 39% of "Generation X" workers and 34% of "Generation Y" workers say their employers provide them with such information. Despite the fact that younger workers have more time to make up for any investment losses in the current market downturn, many of these workers are still taking a more conservative approach:

• 70% of Baby Boomers say that despite the current downturn, they are more likely to have assets invested in the stock market;
• By contrast, only 55% of Gen X workers say they currently invest in the market;
• Gen Y workers are more likely to say the best place for their money to be deposited is in a checking account than any other generational group;
• Gen Y workers also are the most likely (17%) to stop contributing to their 401k if their retirement account balance is lower at the end of 2002 compared to the beginning of the year.

"The lesson for employers from our survey is simple yet profound. As employees seek more involvement and control in managing their retirement programs - as they take greater responsibility for driving their financial future - employers need to get more personal in meeting the individual needs of their workers," said Kim.

"Boomers nearing retirement, for example, clearly have a different set of financial expectations and needs than younger workers. For these different age groups, a 'one-size-fits-all' approach won't work. Employers who recognize this and offer comprehensive solutions tailored to individual stages in life and financial circumstances can attract and retain top talent, setting themselves apart as employers-of-choice," he said.

The survey results point to several tips for employees looking to take a more active role in managing their retirement investment portfolios, and for their employers who want to meet those needs:

FIVE Tips for Employees

1. Have more than one basket for your nest egg - In a word, diversify your assets in a manner that makes sense to you, based on your stage in life, personal circumstances and financial goals. And include in your portfolio a range of investments representing a variety of asset classes and options - not just one - to help secure that nest egg when the market isn't cooperating.

2. Save, save and save a little more - It's "Financial Planning 101," but worth repeating. Do what you can to increase your contribution to your retirement plan. Take advantage of the savings reforms enacted with the 2002 Economic Growth & Tax Reconciliation Act, which increases contribution limits and enables older employees to contribute more to their retirement plans.

3. Use the tools - Financial-planning technology has come a long way. Savers now have access to technological resources - web-based portals through which users can manage their workplace-based benefits, savings calculators, investment allocation systems, life-stage planners, etc. - that can help them make informed decisions about their portfolios. Of course, you can always contact your plan provider call center if you have questions about the tools or how to use them.

4. Read and learn - Many don't bother to read it, but the typical retirement savings statement offers valuable information about how to manage the allocation of assets, and not just the "bottom line" on performance. Take the time to study the statement, and learn more about smart investing by utilizing the on-line education resources available from the more capable retirement-plan providers.

5. Don't be shy - If you don't have access to the savings information you need, don't be afraid to ask your employer to explore the possibilities with your company's plan provider. You might also want to log on to the U.S. Department of Labor (http://www.dol.gov) and American Savings Education Council (http://www.asec.org) websites for ideas on maximizing your retirement benefits.

FIVE Tips For Employers

1. Make it personal - Employers should tailor investment education, communication and guidance to the specific life-stage and financial circumstances of individual employees. They should also make information available through a variety of media, including face-to-face meetings, through call centers, through written material and over the Internet. A "one-size-fits-all" approach simply doesn't meet the expectations and needs of today's employees.

2. Think beyond investments - As employees increasingly look to the workplace for financial and retirement planning, employers need to offer more than just investment options - even if those options are supported by the very best education, communication and guidance programs. "Employers of choice" will distinguish themselves by providing real workplace financial solutions that include college funding plans, banking products and other financial vehicles.

3. Advice is nice - Although current regulations prohibit retirement plan providers from offering specific investment advice to individual employees, employers can work with their providers to establish relationships with third-party, SEC-registered investment advisors, who can deliver the one-on-one investment counseling employees are looking for.

4. Motivate behavior - To help ensure the retirement security of employees, employers should institute educational programs that help employees learn about investing and encourage them to either participate in employer-sponsored retirement plans (if they are not currently enrolled), or to increase their deferrals.

5. Measure results - Employers should work with their providers to track progress, both in increasing participation and deferrals and in ensuring that plan options, education programs and financial-planning tools meet employee needs.

About the Survey

The employee and employer surveys, fielded by KRC Research, were conducted from July 30 to August 6, 2002. The surveys included responses from more than 750 employees as well as more than 200 employers across the United States. The employee survey has a margin of error of +/- 3.6 percent at the 95% confidence level while the employer survey has a margin of error of +/-6.9 percent.

###

401khelpcenter.com, LLC is not the author of this press release and is not associated or affiliated with any firm or organization mentioned unless otherwise noted. Use of any information obtained from this press release is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com, LLC.