August 25, 2010 SHRM Poll: 401(k) Investment Education and Advice Organizations Are Providing to Plan Participants

401(k) Investment Education and Advice | ©SHRM 2010 Introduction The 401 (k) plans covered in this poll include both traditional employer-sponsored 401 (k) plans as well as Roth 401 (k) plans. 2

401(k) Investment Education and Advice | ©SHRM Does your organization sponsor a 401(k) plan? Note: n = 578. Privately owned for-profit organizations (94%) were more likely than nonprofit (51%) and government (39%) sectors to report that they sponsor a 401(k) plan.

401(k) Investment Education and Advice | ©SHRM How many participants are in your 401(k) plan(s)? Note: n = 471. Percentages do not total 100% due to rounding. Only respondents who serve as representatives of a 401(k) plan sponsor were included in this analysis. Publicly owned for-profits (73%) were more likely than privately owned for-profits (45%) and nonprofits (44%) to have 501 or more participants in their 401 (k) plan.

401(k) Investment Education and Advice | ©SHRM 2010 Does the plan you represent provide or make available any of the following services to 401(k) plan participants? 5 YesNoUnsure Investment advice provided directly by the plan you represent, as defined under applicable DOL rules and regulations (for example, individualized recommendations to invest, purchase or sell investments and funds based on the particular needs of a plan participant) 39%47%13% Investment advice provided through an independent third party (for example, Ibbotson or Financial Engines), where a third party serves in an ERISA fiduciary capacity 23%59%18% Investment advice provided by or through an independent third party (for example, Ibbotson or Financial Engines), where a third party does not serve in an ERISA fiduciary capacity 21%60%19% Note: n = Percentages do not total 100% due to rounding. Only respondents who serve as representatives of a 401(k) plan sponsor were included in this analysis.

401(k) Investment Education and Advice | ©SHRM 2010 Other services the plan provides or makes available to 401(k) plan participants Retirement planning tools online. Pay stub modeling; investment advisors available to offer fund selections. Our financial advisor provides investment information. Offer investment options/assistance with directives and account management, but refer employees to personal financial planner for advice. Local investment broker provides training to new employees and is available bi-weekly to employees to answer questions. Information is provided in the quarterly statements that are sent to participants. We are also in the works of doing an education program. General financial services advice, which includes how to incorporate other types of retirement savings tools and how to use them with a 401(k). Financial and retirement advice provided to employees at no cost. Annual education and helpful web site. Advice is offered through a bank that has investment professionals. A financial representative (not associated with the plan sponsor) comes in quarterly. 6

401(k) Investment Education and Advice | ©SHRM Does the plan provide or make available investment education to 401(k) plan participants? Note: n = 436.

401(k) Investment Education and Advice | ©SHRM In what format is the investment education presented? Note: n = Percentages do not total 100% due to rounding. Only respondents whose plan provides or makes available investment education to 401(k) participants were included in this analysis.

401(k) Investment Education and Advice | ©SHRM Which of the following are the subjects of that investment education? Note: n = Only respondents whose plan provides or makes available investment education to 401(k) participants were included in this analysis.

401(k) Investment Education and Advice | ©SHRM Does the plan provide or make available investment advice to 401(k) plan participants? Note: n = 421. Organizations with U.S.-based operations only were more likely than multinational organizations to report that their plan provided or made available investment advice to 401(k) plan participants.

401(k) Investment Education and Advice | ©SHRM In what format is the investment advice presented? Note: n = Percentages do not total 100% due to rounding. Only respondents whose plan provides or makes available investment advice to 401(k) participants were included in this analysis.

401(k) Investment Education and Advice | ©SHRM 2010 In what format is the investment advice presented? Individual Sessions (by operations): Organizations with operations based only in the United States (76%) were more likely than multinational organizations (57%) to report using individual sessions to present investment advice. Individual Session (by sector): Nonprofits (88%) were more likely than publicly owned for-profits (53%) to report using individual sessions to present investment advice. 12 Comparison by Organization’s Operations and Sector

401(k) Investment Education and Advice | ©SHRM Which of the following are the subjects of that investment advice? Note: n = Only respondents whose plan provides or makes available investment advice to 401(k) participants were included in this analysis.

401(k) Investment Education and Advice | ©SHRM Does the plan allow for direct marketing by the plan’s service provider(s) of products or services outside of those offered within a 401(k) plan to participants? Note: n = 412. Percentages do not total 100% due to rounding.

401(k) Investment Education and Advice | ©SHRM Which of the following practices, if any, does your organization currently provide or anticipate providing for investment advice services to 401(k) plan participants, in light of DOL regulations recently published under the Pension Protection Act (PPA)? Note: n =

401(k) Investment Education and Advice | ©SHRM In addition to your responses on computer-model-based and level-fee-based advice arrangements, do you anticipate making any other changes to how you provide investment advice services to 401(k) plan participants in light of DOL regulations recently promulgated under the Pension Protection Act (PPA)? Note: n = 373.

401(k) Investment Education and Advice | ©SHRM 2010 Demographics: Organization Industry Industry Health care, social assistance (e.g., nursing homes, EAP providers)15% Manufacturing—other12% Services—professional, scientific, technical, legal, engineering9% Government/public administration—federal, state/local, tribal7% Insurance7% Financial services (e.g., banking)6% Educational services/education6% Construction, mining, oil and gas5% Retail/wholesale trade4% 17 Note: n = 472. Percentages do not total 100% due to rounding.

401(k) Investment Education and Advice | ©SHRM 2010 Demographics: Organization Industry (continued) Industry Other services (e.g., nonprofit, church/religious organizations)4% Utilities4% Real estate, rental, leasing4% Arts, entertainment, recreation3% Consulting2% Services—accommodation, food and drinking places2% Telecommunications2% Transportation, warehousing (e.g., distribution)2% Manufacturing—auto/auto-related2% High-Tech2% Biotech1% Publishing, broadcasting, other media1% Pharmaceutical1% Association—professional/trade0% Other4% 18 Note: n = 472. Percentages do not total 100% due to rounding.

401(k) Investment Education and Advice | ©SHRM 2010 Demographics: Organization Sector 19 Note: n = 472. Percentages do not total 100% due to rounding.

401(k) Investment Education and Advice | ©SHRM 2010 Demographics: Organization Staff Size 20 Note: n = 282

401(k) Investment Education and Advice | ©SHRM 2010 Demographics: Other 21 Note: n = 490 U.S.-based operations74% Multinational operations26% Single-unit company: companies in which the location and the company are one and the same 35% Multi-unit company: companies that have more than one location 65% Multi-unit headquarters determines HR policies and practices 61% Each work location determines HR policies and practices 2% A combination of both the work location and the multi-unit headquarters determine HR policies and practices 37% Is organization a single-unit company or a multi- unit company? Are HR policies and practices determined by the multi-unit corporate headquarters, by each work location or both? Does the organization have U.S.-based operations (business units) only or does it operate multinationally? Note: n = 473 Note: n = % of organizations indicated that employees at their work location were unionized. Note: n = 468

401(k) Investment Education and Advice | ©SHRM 2010 SHRM Poll: 401(k) Investment Education and Advice Response rate = 21% Sample comprised of 578 randomly selected HR professionals from SHRM’s membership. Margin of error is +/- 4% Survey fielded July 20 – August 2, Methodology For more poll findings, visit: Follow us on Twitter: