Press Release
CitiStreet to Take Fiduciary Responsibility and Provide Advice To Plan Participants
Action Comes in Wake of Key DoL Advisory on Investment Advice
QUINCY, Mass., and PALO ALTO, Calif., June 10, 2002 – In a move that signals a new direction for investment advice following a key Department of Labor opinion, CitiStreet announced today it will be the first benefits provider to offer retirement plan participants fully integrated investment advice, powered by Financial Engines, a leading independent advice technology provider.
The DoL Advisory Opinion 2001-09A, issued Dec. 14, 2001, allows financial institutions to provide advice directly to retirement plan participants when the advice is based on the computer programs and methodology of a third-party, independent advisor, thereby eliminating conflicts of interest. Under this new relationship, CitiStreet Advisors, LLC, serves as the provider of advisory services and fiduciary, while Financial Engines serves as the independent sub-advisor and provider of the advice technology platform.
CitiStreet has been providing call center-delivered advice based on work stations powered by Financial Engines for over three years. Until the DoL Advisory Opinion, to avoid any conflicts of interest, that advice was limited to five level-fee index funds. Following the DoL opinion, CitiStreet and Financial Engines moved to expand their relationship where CitiStreet will deliver advice on existing plan investment options both online and through its call center advisors.
CitiStreet has also taken steps to enhance onsite guidance and education workshops to include face-to-face advice that is consistent and complementary to its online and call center offerings for clients who seek more high-touch advice delivery. Financial Engines’ advice technology platform will serve as the foundation for delivering independent advice to CitiStreet clients that is integrated and consistent across all delivery channels and extremely cost-effective.
"Expanding the use of advice technology allows CitiStreet to deliver premium and personalized services for participants as investors," said James S. Phalen, chairman and CEO of CitiStreet. "CitiStreet, as advisor, will deliver service through multiple channels, ensuring the highest quality advice available to all participants."
Through its alliance with Financial Engines, CitiStreet will be able to broaden its relationships with employer clients, directly serving not only their defined contribution record keeping needs but also acting as the primary advisor for plan participants. Also, as the direct advisor to employees, CitiStreet will have the opportunity to continue serving participants’ advisory needs post-retirement or if they move on to a new employer.
"CitiStreet is privileged to be making a difference in individuals' lives by providing an objective service that will help them save and invest in a way that improves their financial futures," said Ray Martin, president, CitiStreet Advisors, LLC. "We are excited to continue working with our plan sponsors and Financial Engines to provide individuals with the services they need and the investment advice they can trust to plan for a secure retirement."
CitiStreet and Financial Engines have been working together for the past three years to offer employers two investment advice options for participants. Participants would either elect to use the Financial Engines Direct Advice online service or the CitiStreet Advice Account, offered exclusively through the CitiStreet call center, for participants who prefer to talk to a call center representative to receive advice on a specific set of funds.
Through the Advice Account, CitiStreet and Financial Engines have seen early results of the benefits that employees receive when they have multiple access points to advice. For example, callers increase savings from an average of 2.7% to an average of 6.8%, an increase of more than 150%, and forecasts show a caller’s chance of reaching retirement goals nearly doubles to 52 percent.
"We are excited to power CitiStreet’s fully integrated advice offering, which is a model that will redefine the way advice is delivered," said Jeff Maggioncalda, president and CEO of Financial Engines. "CitiStreet is leading the industry by fully integrating our advice technology to provide employees advice through the Web, phone, paper, and face-to-face."
CitiStreet's integrated online and call center advisory service, powered by the Financial Engines' advice technology platform, will set a new benchmark by giving all individuals access to services that previously existed only for high net worth clients. These services include personal assistance with investment selections and transactions from a professional advisor over the core holdings in the retirement plan; ongoing tracking and monitoring of account performance; periodic follow-ups for review; a total portfolio view of all accounts; and continuous portfolio rebalancing services.
Under the new advice model, individuals who call the CitiStreet Call Center will have access to financial advisors who will walk them through their current investment strategy, give them specific fund recommendations across the options in their employer’s plan, and be able to implement investment and contribution changes on the spot. The financial advisor will also set up an online Direct Access account that employees can use themselves online.
Participants who use the Direct Access service will log in to their account and, through a guided online experience, explore changes they can make in their risk level and savings to improve their investment strategy. The advice experience is seamless and users can freely access advice any way they choose, allowing employees to log in online to their accounts anytime or call a CitiStreet financial advisor for assistance with their investment advice needs. By using the Financial Engines platform for Direct Access and Call Center advice, CitiStreet ensures its plan sponsors that all plan participants will receive consistent advice whether through a call center, online or face-to-face.
About CitiStreet
CitiStreet, one of the largest global benefits delivery firms in the United States, is headquartered in Quincy, Mass. It has 3,000 employees and offices in East Brunswick, N.J., Jacksonville, Fla., Lewiston, Maine, Boston, and 35 field offices around the nation. It also has a division, CitiStreet Australia, with offices in Sydney and Brisbane. CitiStreet serves more than 6.5 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 about 700,000 participants and administers $1.5 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.
Financial Engines provides advice technology to help financial institutions and employers solve real-world investor problems for their clients and employees. Financial Engines' services provide specific, actionable investment recommendations based on the outcomes an investor wants to achieve and can be delivered through the web, phone, or face-to-face. More than 15 financial institutions and 750 plan sponsors have hired Financial Engines to make advice available to over 3.0 million individuals. Nobel Prize winning economist William F. Sharpe founded the company with a revolutionary vision: to make institutional-quality advice available to financial institutions and employers that serve individual investors. For more information on Financial Engines, visit www.financialengines.com.
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