People want more retirement savings, and they need help with how to get there.
A study shows that some 70% of plan participants looked to their 401(k) plan as their primary source of retirement income.1 But despite the popularity of 401(k) plans, other reports have shown that nearly 3 in 4 workers didn't think they are on track to retire, and almost 9 in 10 plan participants worried about not having enough money to retire comfortably.2
That’s why we developed Schwab Index Advantage®—a new 401(k) plan offer that combines low-cost3 index funds and a personalized saving strategy with built-in third-party investment advice services.4 Plan sponsors can select a fund lineup of index mutual funds or exchange traded funds. Both options generally have lower operating expenses,* which can leave more money in participants’ accounts to invest. To help participants with plan investing and saving, sponsors can choose between two separate managed independent account service providers. The goal? More savings for your employees and an effective, streamlined plan that may simplify your plan administration.
When it’s time to rethink your 401(k), think Schwab.†
Low-cost index funds can reduce fund-related operating expenses and could help your employees build more savings over time.Learn More
Independent investment advice gives your employees a personalized savings and investment strategy and helps them stay on track to help meet their retirement goals. Advice services provided by GuidedChoice Asset Management, Inc. (GuidedChoice®) or Morningstar Associates, LLC (Morningstar), each a registered investment advisor.Learn More
Investors should carefully consider information contained in the prospectus, including investment objectives, risks, charges, and expenses. You can request a prospectus by calling Schwab at 1-800-435-4000. Please read the prospectus carefully before investing.
Remember that cost is only one consideration when making an investment decision, and an investor may give up the opportunity to outperform the market by not being in an actively managed fund.
* Fund operating expenses represent the total of all a mutual fund’s annual fund operating expenses. Management fees are one component of the fund operating expenses. Index funds generally have low management fees because they don’t have to pay investment managers to actively manage underlying investments.
† Schwab refers to Schwab Retirement Plan Services, Inc. and Schwab Retirement Plan Services Company.
1 Schwab in conjunction with Koski Research, “The New Rules of Engagement for 401(k) Plans,” 2010.
2 Financial Engines, “The Financial Engines National 401(k) Evaluation 2010: Who Benefits From Today’s 401(k)?” 2010; Employee Benefit Research Institute (EBRI), The 2012 Retirement Confidence Survey, March 2012.
3 For illustrative purposes only. The definition of “low cost” is based on Schwab’s research using (1) 2010 data from 195 defined contribution plans serviced by Schwab Retirement Plan Services, Inc. and Schwab Retirement Plan Services Company, and (2) 2010 data from a comparison set of plans serviced by other providers. In this comparison set, the weighted average operating expense ratio (OER) for midsize plans ($20 million–$100 million) using actively managed funds was $55 to $95 per $10,000 invested, and for large plans ($100 million–$350 million) the OER was $50 to $75 per $10,000 invested. For similar-sized plans adopting Schwab Index Advantage, the weighted average OER for index mutual funds or exchange traded funds should be about $15 to $25 per $10,000 invested. This example does not include any fees associated with professional, independent advice services or other fees that may be charged to a participant account.
4 Schwab Retirement Planner® provides participants with a retirement savings and investment strategy, a major component of which is a discretionary investment management service furnished by independent registered investment advisors GuidedChoice Asset Management, Inc. (“GuidedChoice®”) or Morningstar Associates, LLC, a wholly owned subsidiary of Morningstar Inc. Using investment alternatives available in the plan, GuidedChoice creates discretionary managed portfolios based on modern portfolio theory, and Morningstar Associates creates discretionary managed portfolios based on human capital methodology. GuidedChoice and Morningstar Associates are not affiliated with or agents of Schwab Retirement Plan Services, Inc. (“SRPS”), Charles Schwab & Co., Inc. (“CS&Co.”), or their affiliates. Neither CS&Co., SRPS, nor their affiliates supervise, make recommendations with respect to, or take responsibility for monitoring the services provided to participants by GuidedChoice or Morningstar Associates. Schwab Advice Consultants, who are employees of CS&Co. and not of GuidedChoice or Morningstar Associates, facilitate participant access to the GuidedChoice or Morningstar Associates services, but do not provide investment advice or recommendations regarding the GuidedChoice or Morningstar Associates services or generally as part of Schwab Retirement Planner. Use of the term “personalized” in the context of the Schwab Retirement Planner service (“service”) refers to the savings and investment recommendations made by GuidedChoice or Morningstar Associates and personal data that may be provided by the participant which will form the basis for GuidedChoice’s or Morningstar Associates’ allocation of the participant’s account assets in one of the discretionary managed portfolios and will result in a savings recommendation within the plan and outside the plan. For plans that do not include a salary-deferral feature, this fee-based service does not include a savings recommendation within the plan; references to savings strategy, savings recommendation, and annual savings adjustments are not applicable to these plans. My Retirement Progress™ services are also not provided for plans that do not include a salary-deferral feature. Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market. Plan sponsors may select either investment advisor to provide the managed account service within Schwab Retirement Planner. There is no guarantee a participant’s savings and investment strategy will provide adequate income at or through his or her retirement. Fees are charged for Schwab Retirement Planner, including its discretionary investment management service, based on the participant’s account balance. Participants should carefully consider information contained in the materials furnished at their employer’s direction regarding the services provided by SRPS and its affiliates, Morningstar Associates, or GuidedChoice, including information regarding compensation, affiliations, and potential conflicts.