Many successful models will emerge in the race to provide retirement income management to retirees, but by talking to the competition, the first company to gain major ground in this respect is Fidelity Investments of Boston. In October of 2004, Fidelity launched the final piece of its comprehensive retirement program, Fidelity Retirement Income Advantage (FRIA).
Listening to Fidelity executives, the most important aspect of FRIA is that it is not just a product, a planning tool, or a set of marketing materials; it is a full-service program with three components that educates clients; provides planning resources that enable them to cover all their risks through a range of products; and offers a way to monitor assets during retirement through an income management account.
Backing up the entire program is a highly trained customer service staff; phone reps are trained to handle basic calls, but once the conversation gets complicated, the customer speaks to a specialist with extensive training. The first round of training take 30 business days, with period updates after that, said Marcia Mantell, vice president of individual products at Fidelity Investments Institutional Services. Similarly, wholesalers who serve advisers are able to talk intelligently about retirement but can also call in one of three specialists. "This pairing up partnership [of generalists backed up by specialists] is working out well," Mantell said.
Education is the cornerstone of FRIA, and Fidelity is aware of how little most Americans know about retirement. The company has crafted informational campaigns aimed at retirees, pre-retirees, and "people who are starting to kick the tires," said Kelly Kavanagh, vice president of annuity product marketing at Fidelity Investments Life Insurance Co.
"We want people to be overprepared so they can make decisions we need when it's most important," Kavanagh said. To that end, the company has produced a white paper aimed at consumers describing the risks that people face during retirement.
When investors decide they want to plan for retirement with Fidelity, they can do so online, by phone or in person. The whole process is time-consuming and can touch on all of the resources that Fidelity provides.
Most customers speak to at least two different Fidelity representatives, either on the phone or face-to-face, for between two and four consultations, Kavanagh said. "It's not one quick meeting; this is a two-to-three-month process."
The process is time-consuming because it is complicated, but Fidelity has maintained consistency by embedding proprietary methodology into the planning tools used no matter how consumers are contacting the company. "The way we've pulled this together," Kavanagh explained, "the planning experience can be consistent."
Once retirees start drawing income from their savings, they use Fidelity's Income Management Account (IMA), which acts as a dashboard of retirement. The account allows investors to see exactly how their accounts are distributed, even if they are held outside of Fidelity. The account includes consolidated reporting, bill paying and other cash management. Alerts allow investors to see where they are straying from the plan as they go along. Also, alerts can be sent to email or wireless accounts that announce the arrival of Social Security checks or other information.
While much discussion about retirement income involves setting a plan in motion, the reality is that retirement is a long-term process that needs to be monitored and tweaked along the way. The IMA is "the command central in retirement," Kavanagh said, so retirees are "going to know, day-by-day, where they are."