Empower Retirement vs Fidelity

As someone who’s spent countless hours researching retirement plan providers, I’ve come to realize that choosing the right one can make a world of difference in your financial future. Empower Retirement and Fidelity are two giants in this space, each with it’s own unique strengths and offerings.

Here’s a detailed comparison of these two retirement powerhouses.

Company Background

Empower Retirement

Empower Retirement burst onto the scene in 2014, quickly rising to become the second-largest retirement plan provider in the United States. Despite it’s relative youth, Empower has made significant strides in the industry, managing over $1.1 trillion in assets for more than 12 million plan participants as of 2021.

Empower was formed through the merger of Great-West Financial’s retirement business, J.P. Morgan Retirement Plan Services, and Putnam Investments’ full-service retirement business.

This consolidation brought together a wealth of experience and resources, allowing Empower to offer innovative solutions to both person investors and employer-sponsored plans.

Fidelity

Fidelity Investments, founded in 1946 by Edward C. Johnson II, has a long and storied history in the financial services industry.

With over 75 years of experience, Fidelity has established itself as a trusted name in retirement planning, investment management, and brokerage services.

As the largest retirement plan provider in the U.S., Fidelity manages a staggering $11.1 trillion in total customer assets and serves over 40 million person investors. The company’s longevity and scale have allowed it to develop a comprehensive suite of financial products and services that cater to a wide range of investor needs.

Investment Options

Both Empower Retirement and Fidelity offer a diverse array of investment options, but their approaches differ significantly.

Empower Retirement’s Investment Approach

Empower takes a more curated approach to it’s investment offerings. While they provide a wide range of options, including mutual funds, ETFs, and target-date funds, their focus is on quality over quantity.

This approach can be particularly beneficial for investors who feel overwhelmed by too many choices.

Some key features of Empower’s investment options include:

  1. Custom Target Date Funds: Empower offers customizable target-date funds that can be tailored to specific plan demographics or investment philosophies.
  2. Managed Accounts: Their managed account service provides personalized investment strategies based on person participant data.
  3. Self-Directed Brokerage Accounts: For more experienced investors, Empower offers self-directed brokerage accounts that provide access to a wider range of investment options.
  4. ESG Options: Empower has been expanding it’s offerings of Environmental, Social, and Governance (ESG) investment options, catering to the growing demand for socially responsible investing.

Fidelity’s Investment Offerings

Fidelity, true to it’s reputation as a comprehensive financial services provider, offers an extensive array of investment options. Their approach is more akin to providing a vast buffet of choices, allowing investors to select from a wide variety of options to suit their person needs and preferences.

Key aspects of Fidelity’s investment offerings include:

  1. Proprietary and Non-Proprietary Funds: Fidelity offers both it’s own funds and those from other providers, giving investors a wide range of choices.
  2. Low-Cost Index Funds: Fidelity has been a leader in offering zero-fee index funds, which can significantly reduce overall investment costs.
  3. Sector-Specific Funds: For those looking to invest in specific industries or sectors, Fidelity offers a range of sector-specific funds.
  4. International Investment Options: Fidelity provides extensive options for international investing, allowing for greater portfolio diversification.
  5. Thematic Investing: Fidelity offers thematic funds that focus on specific trends or themes, such as disruptive technology or sustainability.

Fees and Expenses

Fees can have a significant impact on long-term investment returns, making this a crucial factor in comparing retirement plan providers.

Empower Retirement’s Fee Structure

Empower Retirement’s fee structure is generally competitive, but it can vary depending on the specific plan and services chosen. Some key points about Empower’s fees include:

  1. Plan Administration Fees: These can vary based on the size of the plan and the level of services provided.
  2. Investment Fees: The fees for person investments within the plan can vary.

Empower offers a range of low-cost options, but they may not be as extensive as some competitors.

  1. Managed Account Fees: If you opt for Empower’s managed account service, there are additional fees based on your account balance.
  2. Transparency: Empower has made efforts to improve fee transparency, providing detailed breakdowns of costs in their participant statements.

Fidelity’s Fee Structure

Fidelity has built a reputation for offering competitive fees, particularly when it comes to their investment options. Here’s what you need to know about Fidelity’s fees:

  1. Zero-Fee Index Funds: Fidelity offers several index funds with zero expense ratios, which can significantly reduce overall investment costs.
  2. Plan Administration Fees: Like Empower, these can vary based on plan size and services, but Fidelity’s scale often allows them to offer competitive pricing.
  3. Investment Fees: Fidelity’s wide range of investment options includes many low-cost choices, particularly their index funds and ETFs.
  4. Additional Services: Fees for additional services like managed accounts or personalized advice are generally in line with industry standards.
  5. Fee Transparency: Fidelity provides detailed fee disclosures and tools to help investors understand and compare costs.

Empower Retirement’s Tech Offerings

Empower has positioned itself as a tech-forward company, investing heavily in digital tools and user experience. Some of their key technological offerings include:

  1. PlanVisualizerSM: This tool provides a visual representation of your retirement savings progress, making it easier to understand your financial situation at a glance.
  2. Mobile App: Empower’s mobile app allows users to manage their accounts, make changes to contributions, and access educational resources on the go.
  3. Retirement Income Projections: Their platform provides personalized retirement income projections based on current savings and contribution rates.
  4. Financial Wellness Tools: Empower offers a suite of financial wellness tools that go beyond retirement planning, helping users manage their overall financial health.
  5. Cybersecurity Measures: Empower has implemented robust cybersecurity measures to protect user data and prevent unauthorized access.

Fidelity’s Digital Platform

Fidelity, leveraging it’s extensive resources and experience, has developed a comprehensive digital platform that caters to a wide range of user needs:

  1. NetBenefits Platform: This is Fidelity’s main portal for retirement plan participants, offering a user-friendly interface for account management and financial planning.
  2. Mobile App: Fidelity’s highly-rated mobile app provides full account access and trading capabilities.
  3. Virtual Assistant: Fidelity offers a virtual assistant to help users navigate their platform and find answers to common questions.
  4. Planning and Guidance Tools: Fidelity provides a range of tools for retirement planning, including retirement income calculators and Social Security benefit estimators.
  5. Integration with Other Fidelity Services: For those who use Fidelity for other financial services, their retirement platform combines seamlessly with these other accounts.

Customer Service and Support

The level and quality of customer support can make a significant difference in your experience with a retirement plan provider, especially when you need help with complex financial decisions.

Empower Retirement’s Customer Service

Empower Retirement offers a range of customer support options:

  1. Phone Support: Available during extended business hours on weekdays.
  2. Online Chat: Accessible through their website for quick queries.
  3. Email Support: For less urgent inquiries or detailed questions.
  4. Educational Resources: Empower provides a wealth of online resources, including articles, videos, and webinars on various retirement planning topics.
  5. Financial Advisors: For more personalized guidance, Empower offers access to financial advisors, though this service may come with additional fees.

Fidelity’s Customer Support

Fidelity is known for it’s comprehensive customer support:

  1. 24/7 Phone Support: Fidelity offers round-the-clock phone support for urgent inquiries.
  2. Online Chat: Available during extended business hours.
  3. Email Support: For non-urgent questions or detailed inquiries.
  4. In-Person Support: Fidelity maintains a network of physical locations where customers can meet with representatives face-to-face.
  5. Educational Resources: Fidelity provides extensive educational materials, including articles, videos, and interactive tools.
  6. Dedicated Retirement Planners: Many Fidelity-managed plans offer access to dedicated retirement planners at no additional cost.

Specialized Features and Innovations

Both Empower Retirement and Fidelity have been working to address emerging needs in the retirement space, developing innovative solutions to help participants save more effectively.

Empower Retirement’s Innovations

  1. Student Debt Solution: Empower has launched a program that helps employees save for retirement while paying off student loans.

This innovative approach allows employers to make retirement plan contributions based on an employee’s student loan payments.

  1. Health Savings Account (HSA) Integration: While not as extensive as Fidelity’s offerings, Empower has been working on integrating HSAs with their retirement planning tools.
  2. Personalized Digital Experience: Empower’s platform uses data analytics to provide a highly personalized experience, tailoring content and recommendations to each user’s specific situation.
  3. Financial Wellness Programs: Empower offers comprehensive financial wellness programs that address various aspects of financial health beyond just retirement savings.

Fidelity’s Specialized Offerings

  1. Health Savings Account (HSA) Integration: Fidelity has been a leader in integrating HSAs with retirement planning, offering a seamless experience for managing both types of accounts.
  2. Student Debt Assistance: While not as comprehensive as Empower’s solution, Fidelity does offer tools and resources to help employees manage student debt alongside retirement savings.
  3. Sustainable Investing Options: Fidelity has expanded it’s offerings of sustainable and ESG (Environmental, Social, and Governance) investment options.
  4. Charitable Giving Services: Fidelity offers specialized services for those interested in incorporating charitable giving into their financial plans.
  5. Estate Planning Services: Fidelity provides tools and resources to help with estate planning, which can be crucial for comprehensive retirement planning.

Plan Administration and Employer Services

For employers, the quality of plan administration services can significantly impact the effectiveness of their retirement benefits program.

Empower Retirement’s Employer Services

  1. Plan Design Consulting: Empower offers consulting services to help employers design retirement plans that meet their specific needs and goals.
  2. Compliance Support: They provide tools and resources to help employers stay compliant with relevant regulations.
  3. Participant Engagement Tools: Empower offers a range of tools to help employers boost participant engagement and improve retirement outcomes.
  4. Reporting and Analytics: Employers have access to detailed reporting and analytics to track plan performance and participant behavior.
  5. Fiduciary Support: Empower provides resources to help employers understand and fulfill their fiduciary responsibilities.

Fidelity’s Employer Services

  1. Comprehensive Plan Design: Fidelity offers a wide range of plan design options to suit different employer needs.
  2. Regulatory Compliance Services: Fidelity provides extensive support for regulatory compliance, including automatic updates to reflect changing regulations.
  3. Employee Education Programs: Fidelity offers a range of education programs to help employees make informed decisions about their retirement savings.
  4. Plan Sponsor Reporting: Employers have access to detailed reports on plan performance and participant behavior.
  5. Benchmarking Tools: Fidelity provides tools to help employers benchmark their plans against industry standards.

Participant Education and Resources

Effective education and resources can significantly impact participants’ ability to make informed decisions about their retirement savings.

Empower Retirement’s Educational Offerings

  1. Personalized Education: Empower uses data analytics to provide personalized educational content based on each participant’s specific situation.
  2. Interactive Tools: They offer a range of interactive tools to help participants understand concepts like compound interest and the impact of different saving rates.
  3. Webinars and Workshops: Empower provides live and on-demand webinars on various retirement planning topics.
  4. Financial Wellness Resources: Their educational resources extend beyond retirement planning to cover broader financial wellness topics.
  5. Mobile Learning: Empower’s mobile app includes educational resources for on-the-go learning.

Fidelity’s Educational Resources

  1. Extensive Online Learning Center: Fidelity offers a comprehensive online learning center with articles, videos, and interactive courses on a wide range of financial topics.
  2. Retirement Planning Tools: They provide a variety of tools to help participants plan for retirement, including retirement income calculators and Social Security estimators.
  3. In-Person Workshops: Fidelity offers in-person workshops at many of their physical locations.
  4. Personalized Guidance: Many Fidelity-managed plans offer access to one-on-one guidance from retirement planners.
  5. Market Insights: Fidelity provides regular market insights and economic updates to help participants understand broader financial trends.

Conclusion

Choosing between Empower Retirement and Fidelity ultimately depends on your specific needs and preferences. Empower Retirement offers a more curated investment approach and innovative features like their student debt solution.

Their tech-forward approach and personalized digital experience may appeal to those who value a modern, tailored user experience.

Fidelity, with it’s long-standing reputation and comprehensive suite of services, may be ideal for those who want a one-stop-shop for all their financial needs. Their extensive investment options, including zero-fee index funds, and 24/7 customer support are significant advantages.

Both providers offer competitive fees, robust employer services, and a range of educational resources. The best choice will depend on factors such as the specific features you value most, the level of guidance you need, and how the provider’s offerings align with your overall financial goals.

Remember, choosing a retirement plan provider is an important decision that can have long-term implications for your financial future. Take the time to carefully consider your options, and don’t hesitate to ask questions or seek additional information before making your choice.

Frequently Asked Questions

What is the difference between Empower Retirement and Fidelity?

Empower Retirement and Fidelity are both retirement plan providers, but they differ in their approach and offerings. Empower is newer and more tech-focused, while Fidelity is a long-established company with a broader range of financial services.

Does Empower Retirement offer index funds?

Yes, Empower Retirement offers index funds as part of their investment options. However, their selection may not be as extensive as Fidelity’s, which is known for it’s wide range of low-cost index funds.

Can I open an IRA with Fidelity?

Yes, Fidelity offers various types of Individual Retirement Accounts (IRAs), including Traditional IRAs, Roth IRAs, and Rollover IRAs.

Does Empower Retirement offer HSAs?

Empower Retirement has been working on integrating Health Savings Accounts (HSAs) with their retirement planning tools, but their offerings in this area may not be as extensive as Fidelity’s.

What are Fidelity’s zero-fee index funds?

Fidelity offers several index funds with zero expense ratios, meaning you don’t pay any ongoing fees to invest in these funds. These include funds tracking U.S. and international stock markets.

Can I access my Empower Retirement account on my phone?

Yes, Empower Retirement offers a mobile app that allows you to manage your account, make changes to contributions, and access educational resources on your smartphone.

Does Fidelity offer 24/7 customer support?

Yes, Fidelity provides 24/7 phone support for urgent inquiries, which is a significant advantage for many customers.

What is Empower Retirement’s student debt solution?

Empower Retirement offers a program that helps employees save for retirement while paying off student loans. Employers can make retirement plan contributions based on an employee’s student loan payments.

Can I get in-person support with Fidelity?

Yes, Fidelity maintains a network of physical locations where customers can meet with representatives face-to-face for support and guidance.

How does Empower Retirement’s PlanVisualizerSM work?

PlanVisualizerSM is a tool provided by Empower Retirement that gives a visual representation of your retirement savings progress, making it easier to understand your financial situation at a glance.

Key Takeaways

  1. Empower Retirement offers a more curated investment approach, while Fidelity provides a wider array of options.
  2. Fidelity stands out with it’s zero-fee index funds and 24/7 customer support.
  3. Empower Retirement has innovative features like their student debt solution and PlanVisualizerSM tool.
  4. Both providers offer competitive fees, but the specifics can vary based on plan details.
  5. Fidelity’s longer history and broader financial services may appeal to those wanting a one-stop-shop for their financial needs.
  6. Empower’s tech-forward approach may be attractive to those valuing a modern, personalized digital experience.
  7. Both companies offer robust employer services and educational resources for plan participants.