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Three Out of Four Investors Who Complete an Income Plan with an Advisor
Say They are Willing to Move All of Their Assets to One Advisor1
BOSTON, September 5, 2007 -- Fidelity Investments today introduced the Fidelity Retirement Income Evaluatorsm, a sophisticated Web-based planning tool designed to help advisors create and manage retirement income plans for their clients as well as build a more efficient and profitable retirement business model.
The tool, which is being offered by Fidelity's three advisor businesses -- Fidelity Investments Institutional Services Co., Fidelity Registered Investment Advisor Group and National Financial -- is the newest component of comprehensive retirement income planning programs offered by Fidelity and National Financial. Fidelity Retirement Income Evaluator will be made available at no cost to advisors working with Fidelity. Fidelity's three advisor businesses collectively service more than 135,000 advisors with assets under administration in excess of $1.2 trillion.
"With nearly 8,000 Baby Boomers turning 60 every day and assets in the hands of those age 60 and older expected to double to $20 trillion over the next five years, retirement income planning is likely the single biggest growth opportunity this generation of advisors will ever see," said David L. Liebrock, executive vice president, Fidelity Investments. "The new evaluator tool in combination with our broader retirement income programs offers advisors access to virtually all the resources they need to help establish growing and profitable practices focused on income planning."
"Through our new tool, advisors can build stronger client relationships and capture a more complete picture of their clients' portfolios, including assets they manage and assets that are held-away. This functionality can help advisors build a more comprehensive plan for the client and also potentially grow their business through asset consolidation," said Jody Meth, executive vice president, National Financial. "Additionally, for advisors using National Financial or Fidelity Registered Investment Advisor Group's brokerage workstations, the Evaluator can pre-populate with existing client asset and account information, helping to create greater efficiencies."
According to Fidelity research, 77 percent of investors who built a retirement income plan with an advisor indicated they would be willing to move all of their assets to one advisor and 95 percent said they would refer someone to the advisor. Additionally, among those same clients, advisors have realized a 50 percent increase in "very satisfied" clients.2
New Tool Streamlines Retirement Income Planning
Depending on the complexity of a client's situation, the Fidelity Retirement Income Evaluator is flexible enough to allow advisors to create an income plan in as few as 15 minutes using default settings and estimates. Or advisors can spend additional time to build a more robust income plan by entering current and projected asset and expense information.
Once client personal information is entered, advisors would begin building a retirement income plan by entering client-specific data related to their income, expenses and assets.
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Income -- Advisors enter a client's salary information, as well as any other sources of income such as pensions and rental property. They can also enter income information for a spouse or planning partner.
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Expenses -- Advisors enter detailed information about a client's expenses, and categorize them as essential versus discretionary. Unlike many other planning tools, the Fidelity Retirement Income Evaluator allows advisors to see how a plan is impacted over time by changes in client spending patterns in retirement. For example, if a client's mortgage will be paid off in year seven of the plan, this can be entered so the plan automatically adjusts at that time.
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Assets and financial events -- Advisors enter a client's assets under management as well as assets held by other institutions. Financial events, such as the anticipated sale of a business, also can be entered to take effect at a future date. Additionally, the Fidelity Retirement Income Evaluator allows advisors to analyze how a client's use of alternative asset allocation models may change the retirement plan.
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Once income, expenses and assets are entered, the Fidelity Retirement Income Evaluator runs at least 250 hypothetical Monte Carlo simulations to generate a printable retirement income plan report that estimates the likelihood the client will successfully cover his or her retirement expenses. Included in the plan is a year-by-year cash flow analysis, beginning at the client's expected retirement date and running through the end of the plan. The Monte Carlo simulations and the cash flow analysis allow the advisor to explore different scenarios and see the potential impact changes, such as delaying retirement or shifting asset allocation, may have on a retirement plan.
Another unique feature of the Fidelity Retirement Income Evaluator is that it does not include investment product recommendations, and as a result, advisors can use the tool to complement their own existing processes and investment styles.
In addition, advisors can customize the income plan report with their name and firm name, as well as include key topics for discussion with their clients.
"The power of the offering is not just in providing a tool, but rather it's in creating a comprehensive program," said Gary Gallagher, senior vice president, Fidelity Registered Investment Advisor Group. "Working collaboratively, all three of Fidelity's advisor businesses have invested significantly in building programs that leverage the retirement expertise of the overall organization on behalf of their clients and that are designed to help advisors capture the enormous retirement planning opportunity."
About Fidelity Investments Institutional Services
Fidelity Investments Institutional Services Company provides investment management services through investment professionals at financial institutions nationwide, including wirehouses, regional and independent broker/dealers, banks, trust companies and insurance companies. The company offers Fidelity Advisor Funds®, Variable Insurance Product (VIP) Portfolios, systematic investment plans, institutional money market funds and a comprehensive line of retirement products and services. Fidelity Investments Institutional Services Company's total assets under management were $274.9 billion as of June 30, 2007. For more information, advisors may visit www.advisor.fidelity.com.
About Fidelity Registered Investment Advisor Group
Fidelity is a leading provider of wealth management, custody and brokerage services to financial intermediaries. The company custodies more than $290 billion in assets on behalf of more than 3,800 RIA, bank trust and TPA clients as of June 30, 2007. Fidelity provides access to a flexible, open technology environment, extensive practice management resources, and wealth management investments and services - all backed by the long-term commitment of a private company. Dedicated relationship professionals work consultatively to help clients choose the products and services that are in the best interests of their clients and make the most sense for their business. For more information about Fidelity's services, please visit www.ria.fidelity.com.
About National Financial
National Financial, a Fidelity Investments company, offers Integrated Brokerage Solutions® to over 330 clients ranging from retail broker/dealers to institutional investment firms. Collectively, National Financial's clients have more than 86,000 brokers. As of June 30, 2007, National Financial custodied over $692 billion in assets, representing 5.5 million accounts. Integrated Brokerage Solutions incorporates innovative technology, products and programs, supported by dedicated client service professionals and trusted industry partners. This holistic, solutions-oriented approach is designed to help client firms attain competitive advantage by driving growth, creating efficiency and managing risk. For more information about National Financial and Integrated Brokerage Solutions, please visit www.nationalfinancial.com.
About Fidelity Investments
Fidelity Investments is one of the world's largest providers of financial services, with custodied assets of more than $3.2 trillion, including managed assets of $1.5 trillion as of July 31, 2007. Fidelity offers investment management, retirement planning, brokerage, and human resources and benefits outsourcing services to more than 23 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, the largest mutual fund supermarket and a leading online brokerage firm. For more information about Fidelity Investments, visit www.fidelity.com.
1Fidelity Advisor 2006 Survey of Investors at Retirement
2Ibid.
IMPORTANT: The projections or other information generated by the Fidelity Retirement Income Evaluator regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. This tool uses Monte Carlo simulation methodology to estimate potential income growth, using a minimum of 250 hypothetical market simulations. The market return data used to generate the illustration is intended to provide you with a general idea of how an asset mix similar to your portfolio (or a selected target asset mix) has performed historically. The analysis assumes a level of diversity within each asset class that may differ from that found in your portfolio. Numerous factors make the tool's calculations uncertain, such as the use of assumptions about historical returns, tax rates and inflation as well as the data you have provided. The tool uses financial data provided by third-party vendors in the simulations and the accuracy or timeliness of that data cannot be guaranteed. Taxes, fees, and/or expenses will generally reduce your actual investment returns and are not reflected in the hypothetical illustrations generated by this tool. Results may vary with each use and over time.
Fidelity Retirement Income Evaluator is an educational tool developed and offered for use by Strategic Advisers, Inc. (SAI), a registered investment adviser and a Fidelity Investments Company.
Fidelity Investments Institutional Services Company, Inc.
82 Devonshire Street, Boston, MA 02109
National Financial Services, LLC, Member NYSE, SIPC
200 Liberty Street, NY4F, New York, NY 10281
Fidelity Brokerage Services LLC, Member NYSE, SIPC
100 Summer Street, Boston, MA 02110
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