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Fidelity Pursues Pre-Retirees Online

NEW YORK - Fidelity has introduced 250 pages of web-based financial planning aids designed for advisors' pre-retiree clients, Fidelity executives said. The aids became available at Fidelity's advisor website,, Oct. 12.

Fidelity views the pre-retiree and the retirement markets as the next major business opportunity and it is planning to pursue this market with the help of the 60,000 financial planners it currently does business with, said Marty Willis, executive vice president for Fidelity Investments Institutional Services Company of Boston. Willis described Fidelity's plans in an interview here earlier this month.

In 1990, the dollar amount of rollovers surpassed 401(k) contributions for the first time and the gap widened throughout the 1990's, Willis said. Fidelity now estimates that the ratio of rollover money to 401(k) contributions is two to one, she said. [See chart.]

Fidelity estimates that investors contributed $99.71 billion to their 401(k) and other defined contribution plans in 1999, but rolled over more than $200 billion from those plans, Willis said.

Fidelity market research shows that each account is sizeable, said Peter Smith, vice president of program management for interactive business services at Fidelity. The average balance in accounts that are rolled over due to job change or retirement is $119,000, and one in seven is $250,000 or greater, Smith said.

There are more than 24 million Americans currently approaching retirement - people between the ages of 55 and 64, Willis said. Approximately 60 percent of these pre-retirees do not have a post-retirement budget, according to Fidelity market research conducted in August, Willis said. By 2010, more than 35 million Americans will fall into this pre-retiree age bracket, Willis said.

"We are now dealing with the tip of the iceberg," Willis said. "These numbers will probably grow."

"By making the wrong moves with respect to failing to opt for IRA stretch-out programs or naming a [sub-optimal] beneficiary, you can lose as much as 80 percent of your money to estate taxes, income taxes and the IRS," Willis said. "Many of the decisions that pre-retirees face are required and irrevocable, and will have a significant effect on their ability to achieve their long-term financial goals."

"Intermediaries are looking for help on this," Smith said. "We want to help them create a way to go after this incredible market opportunity."

Fidelity's new pre-retiree program has five components - how to manage post-retirement money, sales strategies, marketing materials, planning aids for the investor, and information on Fidelity products and services to meet investors' financial needs.