HIPAA News

Standard Register Selects Financial Engines’ Professionally Managed 401(k) Account Program

(Nov 27, 2007)-- Financial Engines announced that Standard Register, document services provider, has made Financial Engines’ professionally managed 401(k) account program the default investment option for its 3,500 employees. The decision to automatically enroll existing and new employees into managed accounts is part of Standard Register’s strategic initiative to make participation, savings and successful investment in the company’s 401(k) plan easier and simpler for its associates.

In an effort to improve participation in its 401(k) plan, Standard Register, in conjunction with its plan administrator, T. Rowe Price, began automatically enrolling new employees in its 401(k) plan in 2005. Each employee was automatically enrolled in the plan at a savings rate of 3%, increasing 1% per year up to 12%. Originally, employees were automatically invested in a stable value fund, but after the majority of employees failed to diversify their accounts, the company took action.

After evaluating alternatives, Standard Register decided to automatically enroll current and new employees in managed accounts using Financial Engines’ “Passive Choice” approach. Starting in June 2007, Standard Register 401(k) participants were notified that their 401(k) accounts would be professionally managed by Financial Engines for a fee, starting in August 2007 unless they chose to manage their 401(k) themselves. Participants then received a plan preview that analyzed their portfolios and showed the recommended portfolio allocations Financial Engines would make if they remained in the program.

Once enrolled, Financial Engines handles all 401(k) portfolio investment decisions for managed account program members, reviewing their accounts on a quarterly basis to keep participants on track. Program members are kept informed with printed progress reports, and employees can speak to an Investment Adviser Representative if they have any questions or would like to personalize their portfolios further.

“Some employees can find investing in a 401(k) plan intimidating or bewildering, and we wanted to design our plan so that even if they do nothing, employees will be participating, saving more and investing appropriately for their individual retirement needs,” explained Richard Mayer, Director of Benefits and HIPAA Privacy, at Standard Register. “We selected Financial Engines managed accounts because at a reasonable cost, managed accounts provide personalized portfolios, service and communications.”

The Pension Protection Act of 2006 provided employers with encouragement to create automatic 401(k) plans. That legislation, combined with the recent Department of Labor (DOL) final regulation on qualified default investments that designated managed accounts as a "Qualified Default" investment, continue to drive strong employer demand for managed accounts. As a result, many companies are redesigning their 401(k) plans in an attempt to make participant success more automatic.

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