BANK OF AMERICA

Newsroom

 

Facts & Resources

Bank of America Merrill Lynch 401(k) Report Finds Employers and Employees Taking Action to Improve Financial Wellness

401(k) Plan Design Features and Personalized Financial Advice Help Drive Positive Behaviors Among Employees

Thursday, March 7, 2013 9:00 am EST

Dateline:

NEW YORK

Public Company Information:

NYSE:
BAC
"Through targeted communications and allowing them time, when possible, to attend face-to-face meetings and receive financial advice at work, companies can help employees achieve more successful outcomes and improve their long-term financial security."

Since 2009, employees have been taking increasingly positive actions in their 401(k) plans, widening the gap between those taking negative actions, according to a new report released today by Bank of America Merrill Lynch. The latest 401(k) Wellness Scorecard, which reveals quarter-over-quarter and year-over-year trends in plan participant behaviors, along with employers’ adoption of 401(k) design features in plans serviced by Bank of America Merrill Lynch, found that:

  • Among employees who took action in their 401(k) plan during the fourth quarter last year, 81 percent took a positive action, such as starting or increasing contributions. That compares with 19 percent who took a negative action, such as stopping or decreasing contributions. These actions, which are measured quarterly and in this case occurred amidst a presidential election and fiscal cliff uncertainty, represent a two-year high.
  • New 401(k) loan issuance transactions declined approximately 5 percent year-over-year, and total 401(k) hardship and in-service withdrawals fell nearly 8 percent year-over-year.
  • As of the end of 2012, more than 90 percent of 401(k) participants who were automatically enrolled were still actively contributing to their plans.

During the last few years, employers have increasingly adopted more intuitive plan design strategies and other services to make their 401(k) plans easier to use and to help drive better outcomes from employees. These changes include simplifying employee decision-making regarding enrollment, contributions and wise investing through the adoption of auto programs along with greater access to advice tailored to fit an individual’s personal situation and life stage.

“HR professionals and financial services providers must continue to work together to protect and improve our retirement system by taking every step possible to help employees start early and continue on a path toward financial wellness,” said Kevin Crain, head of Institutional Retirement and Benefits Services. “By empowering them to get the most out of their plans, employees can take greater control of their financial future.”

Last year, employers sought new, proactive ways to help their employees achieve their retirement goals. Results from the report show that:

  • As of January 2013, more than half (52 percent) of plan sponsors who use automatic enrollment are now also using automatic increase in their 401(k) plans. Overall, year-over-year plan sponsor use of auto increase rose 17 percent.
  • In 2012, 30 percent more employers requested that meetings and seminars be held with their employees, and 22 percent more employees took advantage of such financial education services.
  • Tens of thousands of employees attended seminars or face-to-face meetings with a Bank of America Merrill Lynch financial professional last year at their place of work. Employers who offered in-person meetings with a financial professional were up to two-thirds (67 percent) more likely to increase enrollment or contributions in their company’s plan.

“While it can be difficult for employees to improve their retirement saving and investing behaviors, employers can play an important role in fostering an environment that aids such positive change,” says Michael Liersch, director of Behavioral Finance for Bank of America Merrill Lynch. “Through targeted communications and allowing them time, when possible, to attend face-to-face meetings and receive financial advice at work, companies can help employees achieve more successful outcomes and improve their long-term financial security.”

To access the Bank of America Merrill Lynch 401(k) Wellness Scorecard, click here.

Bank of America
Bank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 53 million consumer and small business relationships with approximately 5,500 retail banking offices and approximately 16,300 ATMs and award-winning online banking with 30 million active users. Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries. Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.

Visit the Bank of America newsroom for more Bank of America news.

www.bankofamerica.com

Contact:

Reporters May Contact:
Matt Card, Bank of America, 1.617.434.1388
matthew.card@bankofamerica.com