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JULY

PlaNlINk : jUly 2012 - T. Rowe Price

from the editor’s desk

from the editor’s desk “Confidence” is our front line. What’s yours? It’s more than a tagline at T. Rowe Price. EDITOR Matt Johnson MANAGING EDITOR Michael Gaucher CONTRIBUTING EDITORS Jerry Appelbaum Nicole Davis ART DIRECTORS LeSales Dunworth David Kepner Julie Zerivitz COPYWRITERS Jerry Appelbaum Carl Bowers Stephen Brockelman Dan Bunch Michael Gaucher David George Megan Jicha Rich Lackey Ellen Persons Julie Stromberg Mary Toole David Williams DESIGNERS Ali Colman David Kepner Kris Olson Anne Sonntag Jon Zerivitz Julie Zerivitz ILLUSTRATION Eugene and Louise Olaf Hajek Graham Smith Joe Wilson PRODUCTION MANAGER Sonja Harrell Sampson At our recent client Forum in San Antonio I had the privilege to hear one of our speakers, Eric Greitens, a decorated Navy Seal and humanitarian, talk about his nonprofit organization, The Mission Continues. This organization helps wounded soldiers find a way to continue serving once they are unable to serve in the military. Mr. Greitens stresses the idea that while soldiers may not be on the front lines anymore, they can still have a “front line.” A new one that they get to define. That got me thinking about our firm’s front line—the North Star that guides what we do: “Confidence.” On the surface, it’s part of our brand motto—Invest With Confidence®. However, it expresses something deeper. It is a standard we live up to and hope to inspire in our partners, clients, and communities worldwide every day. It’s built on a principle of “three I’s” that Cynthia Egan, president of T. Rowe Price Retirement Plan Services, shared with Forum attendees: • Integrity: Never compromise around doing the right thing for our clients, partners, and communities • Insight: Bring ideas to you through thought leadership and best practices, and work together to take action • Innovation: Focus on smart and relevant innovation around products, processes, services, technologies, and ideas A reimagined participant experience The ideas behind the three I’s drive the participant experience outlined in this issue’s cover story: “The Heart and Science of the Participant Experience.” In this story you’ll see how we’re introducing a new approach to the experience that recognizes there is more to a participant’s financial life than a retirement plan. Each individual faces competing financial priorities, an ocean of information, increasingly volatile markets, and rapidly changing technology that makes things easier while increasing in complexity. It’s real life, and we’re taking a fresh look at providing a more personalized, holistic, and pragmatic participant experience. The story starts on page 4. Also in this issue we spotlight Fairfax County 457 plan, a plan that also took on the participant experience as a “front line,” earning it Public Defined Contribution “Sponsor of the Year” from PLANSPONSOR magazine. Catch our interview with Aimee D. Lowry of Fairfax County on page 13. Another important story in this issue asks whether it is possible for “good news” and “fiduciary” to live in the same sentence. They can now because, in close collaboration with Bradford Campbell (former U.S. assistant secretary of labor for employee benefits), we developed a suite of fiduciary training materials to make it easier to meet the responsibilities of a fiduciary under ERISA. Access it through our Plan Sponsor Resource Center at rps.troweprice.com/plansponsor. See page 10 for the full article. For 75 years we’ve known our front line; what’s yours? As I mentioned, “Confidence” is our front line. Perhaps this issue might inspire you to identify yours. And finally, we are excited to have just celebrated our 75th anniversary on July 1, and we could not have gotten here without you. So, on behalf of all our associates, thank you. If you have ideas on how we can make planLink an even more successful “must read,” please let me know. You can e-mail me at matt_johnson@troweprice.com. rps.troweprice.com/sponsor

SPONSOR By The Numbers PROFILE When it comes to RETIREMENT, they are on a different wavelength GENERATION Y BABY BOOMER BORN IN 1946–1964 CURRENTLY AGES 48–66 GENERATION Y BORN IN 1982–1995 CURRENTLY AGES 17–30 1951 1995 STEADY ECONOMIC GROWTH* 1996 2011 EXTREME VOLATILITY* For 30 years, the attitudes and behavior of baby boomers have shaped the services and innovations in defined contribution plans. ISSUE: High unemployment and increasing debt among younger Americans have created substantial barriers to saving for retirement. INSIGHT: INAPPROPRIATELY RISK-AVERSE, particularly given their long-term investing time horizon. RESULT: It’s not surprising that Gen Y has substantially different attitudes toward saving and investing than the baby boomer generation. **FACT: SOLUTION: Fine-tune the message for a younger audience. In 2009, 21% of those surveyed between the ages of 25 and 35 who are not invested in target-date funds had more than 80% of plan assets invested in cash. 05 03 Explain the benefits of remaining 01 invested through periods of volatility. Stress the potential advantages of target-date investments, when appropriate. Establish appropriate default savings and auto-increase rates. 02 Incorporate automated services, target-date investments, professional guidance, advice, or managed accounts into your plan. 04 Focus on increasing saving rates, the most conservative approach to achieving long-term retirement security. *Represents the performance of the S&P 500. **Source: T. Rowe Price Retirement Plan Services 401(k) accounts that are currently active, have a positive balance, and do not include any assets invested in target-date funds. Cash includes money market and stable value funds. rps.troweprice.com/sponsor PlanLink : july 2012 3

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