Baby boom employees are approaching retirement without enough savings, and plan providers must address this fact in order to succeed, says Melissa Hooker, the chief client officer of JPMorgan Retirement Plan Services.
"The boomer phenomenon that's begun is one that wears on the minds of plan sponsors," she said. "Our biggest challenge is providing new services for our clients to help them with these issues."
Ninety percent of JPMorgan plan participants use some aspect of the provider's set of tools, which is dubbed "Audience of One," Ms. Hooker said. One interactive tool helps participants "fast-forward" to see how comfortable their retirement would be under their current savings trajectory.
These tools have helped give JPMorgan the retirement industry's highest average account balance - about $74,000, according to Ms. Hooker.
And thanks in part to success in cross-selling retirement services to the parent company's institutional clients, JPMorgan Retirement Plan Services has the second-largest average plan size, measured in number of participants.
In January 1998, the New York banking company bought a 45% stake in American Century Investments, a Kansas City, Mo., mutual fund company, and they started J.P. Morgan/American Century Retirement Plan Services.
JPMorgan Retirement Plan Services, a subsidiary of JPMorgan Chase & Co., acquired full ownership of the joint venture two years ago and last week celebrated surpassing the one-million mark in retirement plan participants. It has 185 corporate clients.
Multiple surveys have reported that many Americans are not saving enough to fund their accustomed lifestyles in retirement - even those whose employers offer to match 401(k) contributions.
A survey released May 24 by Prudential Retirement, a unit of the giant insurer in Newark, N.J., found that 60% of Americans are "behind schedule" in saving for retirement and 70% are more concerned about short- and mid-term financial goals than long-term ones.
And another recent survey, this one by Hewitt Associates LLC, found that what matter most to a majority of employers in the coming year are getting workers to appreciate what their 401(k) offers, promoting personal responsibility for retirement planning, and increasing plan participation.
Many Americans can easily name the price paid for their last major purchase, Ms. Hooker said, but not how much it will cost to pay for retirement. Financial firms have "not done a great job at providing information to make decisions for retirement," she said.
Quarterly 401(k) account statements, for instance, tend to give account sizes and other data without context. Plan participants often do not see a comprehensive view of their retirement plan together with outside holdings and projected Social Security income, she added.
JPMorgan offers tools, including online and telephone, to help plan participants understand whether they're taking full advantage of what is available to them and, if not, how to do so.
In the past two years, the unit said, it has snagged blue-chip clients Sony Ericsson and Southwest Airlines. The business administers defined contribution assets of $71 billion. As of Dec. 31, JP Morgan Asset Management managed $17.2 billion of that, according to Pensions & Investments magazine. No. 1 Fidelity Investments, by comparison, managed $419.6 billion of defined contribution assets.
JPMorgan's 401(k) business got a late start, not signing up its first client until 1991. Later, the partnership with American Century got off to a slower-than-expected start, according to Burt Greenwald, a mutual fund consultant at BJ Greenwald Associates in Philadelphia.
"When the deal was announced, it seemed very logical," he said. "The 401(k) market was beginning to explode, American Century had the ideal product to fill the need, and Morgan had high-level institutional relationships in place."
But "they found it a lot harder to connect than originally anticipated," he said.
