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Offers Tips Gained from Nearly One Half Million Portfolio Reviews
BOSTON, December 7, 2005 - When more than 1 million college graduates entered the workforce this fall1, they began the first of what could be seven job moves during a 40-year working career2.
In fact, according to a recent study from Fidelity Investments, one-third of today's new workforce could be compiling a series of stand-alone retirement savings accounts which may not be as diversified as they think3. With each job change, these new workers and millions of others are faced with the increasingly challenging task of monitoring and managing their workplace retirement savings accounts.
"As American workers continue to change jobs, we know that approximately 32 million have left behind retirement accounts with past employers," said Jeffrey R. Carney, president, Fidelity Personal Investments. "Our research also shows that 41 percent of investors with multiple retirement accounts believe that maintaining separate accounts makes for a more diversified portfolio. While Americans are more savvy about investing, many have lost sight of what 'diversification' really means - spreading out money over different types of investments such as stocks, bonds and cash to manage risk - which can't be assured simply by having multiple accounts."
In reviewing the portfolios of nearly one half million investors over the past year, Fidelity found that many need to be reminded of three basic tenets for managing a diversified portfolio -- know what you own, know how much you're paying, and know when it's time to seek guidance.
Know What You Own
In working with investors of all ages, Fidelity has found that oftentimes customers who maintain multiple accounts don't realize the makeup of their overall investments and may be heavily over- or underweighted in a specific type of investment sector or security.
"Our research shows that nearly half of younger working Americans have either 'all or none' of their retirement assets invested in stocks or stock mutual funds," Carney said. This could potentially result in excessive risk exposure or hindered growth opportunities.
Know What It Costs
Maintaining multiple accounts not only creates additional paperwork it can also cost more when account maintenance fees are accessed by multiple providers.
"Many investors are surprised to find that they are holding a variety of mutual funds with above-average expenses or paying more in fees by maintaining several smaller balance accounts," Carney said. Consolidating accounts can help investors save money and qualify for added discounts and increased services.
Know When to Seek Guidance
Managing and monitoring multiple accounts via numerous statements and Websites can add increased layers of complexity for investors. In fact, nearly a quarter of investors with multiple accounts reported trouble keeping track of them.
"Annual check-ups are a must," Carney said. "Additionally there are many investors who should be making changes to their portfolios as a result of life event changes."
Investors who review their portfolio annually with Fidelity's free online Portfolio Review tool receive an in-depth analysis of their investments and guidance to help manage savings, identify potential risks and rebalance their holdings. In addition, those who conduct a portfolio review with Fidelity before March 31, 2006 will receive an exclusive Paul McCartney compilation CD. For more information investors can call 1-800 FIDELITY, visit one of Fidelity's 108 Investor Centers located nationwide, or logon to Fidelity's Retirement Resource Center at www.fidelity.com/retire.
About the Survey
The Fidelity study was conducted by Richard Day Research with over 2,000 working Americans who are 25 years or older and who report at least $20,000 in household income. Those with multiple retirement accounts had at least two retirement accounts outside of a current employer's plan. The online survey was conducted between September 9-13, 2005. The margin of error is +/-2 percent.
About Fidelity
Fidelity Investments is one of the world's largest providers of financial services, with custodied assets of $2.3 trillion, including managed assets of $1.1 trillion as of October 31, 2005. Fidelity offers investment management, retirement planning, brokerage, and human resources and benefits outsourcing services to more than 20 million individuals and institutions as well as through 5,500 financial intermediary firms. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, one of the largest mutual fund supermarkets and a leading online brokerage firm. For more information about Fidelity Investments, visit www.fidelity.com.
Guidance is provided by Fidelity Representatives though the use of Portfolio Review. Portfolio Review is an educational tool and is not intended to serve as the primary or sole basis for your investment or tax-planning decisions. The tool was developed by Strategic Advisers, Inc., a registered investment adviser and a Fidelity Investments company, and by Fidelity Brokerage Services LLC, member NYSE, SIPC.
1National Center for Education Statistics: Projections of Education Statistics to 2014 (2005).
2Derived from 2004 Bureau of Labor Statistics on median employee tenures by age bracket from 21 to 60 years old.
3Diversification does not ensure a profit or guarantee against loss.
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Fidelity Brokerage Services LLC, Member NYSE, SIPC,
100 Summer Street, Boston, MA 02110
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