Qualified Default Investment Alternative (QDIA) and Financial Advice

1
Qualified Default Investment Alternative (QDIA)
and Financial Advice

• Defined Contribution Plans in a Post-PPA
  Environment

2
QDIAs and Financial Advice

• Larger employers have embraced 401(k) plan
  automation in recent yearsbefore the green light
  of PPA
• These employers have already taken steps to
  utilize the clarifications and protections
  offered by PPA
• Large employers generally more likely to use
  mechanical structures to improve employee
  investment decisions (such as QDIAs and automatic
  rebalancing) over managed accounts

3
Increased Growth of Automatic Enrollment
Future Direction Future Direction
Very Likely 30
Somewhat Likely 27
Unlikely 43

Current State Current State
Already Have 44
Dont Have 56

Growth of automatic enrollment continues was 4
in 1997, 36 in 2007 and 44 in 2008 22 of
respondents currently also automatically default
existing employees, with 27 of the remainder
considering it.
Source Hewitt, Hot Topics in Retirement Plans
(2008)
4
Default Investment Option Details2007
Source Hewitt, Trends and Experience in 401(k)
Plans (2007)
5
Historical Default Investment Option Comparison
20012007
Source Hewitt, Trends and Experience in 401(k)
Plans (2007)
6
Likely Changes to Automatic Enrollment 2008
Source Hewitt, Hot Topics in Retirement Plans
(2008)
7
Tools to Assist Employees with Investment
Selection
Investment tools are a primary focus of employers.
Source Hewitt, Hot Topics in Retirement Plans
(2008)