Workplace Insights. 401(k) Wellness Scorecard. Key findings. For quarter ending September 30, 2013

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1 RETIREMENT & BENEFIT PLAN SERVICES Workplace Insights 401(k) Wellness Scorecard For quarter ending September 30, 2013 During the third quarter of 2013, data across the participant base showed that the youngest and oldest employees were most likely to take positive action related to their financial wellness. Meanwhile, employers continued to adopt plan design features that encourage smart retirement savings behaviors. Mobile use skyrocketed for Benefits OnLine, our participant website, increasing more than 400% since the start of This shows that employees are accessing their plans on-the-go and finding mobile access a convenient way to manage their accounts. This quarterly scorecard monitors plan participant behavior and plan sponsor adoption of new plan design features and services in our proprietary 401(k) business. This segment comprises $114.1 billion in total client balances and 2.5 million total plan participants with balances. 1 All results are as of the quarter ending September 30, 2013, except where noted. It s clear that employees are eager to boost their financial wellness, and employers are giving them the tools and guidance they need to do so. There is certainly more to be done to boost Americans financial wellness, and we are proud to be among the service providers collaborating with employers to do just that. Kevin Crain Senior Relationship Executive, Bank of America Merrill Lynch Bank of America Merrill Lynch is a marketing name for the Retirement Services business of Bank of America Corporation ( BAC ). Banking activities may be performed globally by banking affiliates of BAC, including Bank of America, N.A., member FDIC. Brokerage services may be performed by wholly owned brokerage affiliates of Bank of America Corporation, including Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S), which is a registered broker-dealer and Member SIPC. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value See last page for important information. Key findings Our third quarter results provide new insights into the ways employers and employees can work together toward employee financial wellness. 1. Positive steps by employees younger than 30 and older than 50. These groups were responsible for the majority of the contribution starts and increases, suggesting they are particularly focused on their retirement plans. 2. Plan design is encouraging and supporting smart behavior. Employers are adopting automatic features that make it easy for otherwise inactive employees to join their plans and contribute more over time. 3. Technology is enabling employee engagement. Growth in mobile visits to our Benefits OnLine website demonstrate that employees are eager for retirement education and resources particularly when they re convenient and easy to access. 4. Individual attention and simple steps help employees move forward. One-on-one interactions and programs that give employees the chance to take immediate action can help boost retirement readiness.

2 401(K) WELLNESS SCORECARD FOR QUARTER ENDING SEPTEMBER 30, Positive actions continue to outpace negative actions Bank of America Merrill Lynch tracks employees interactions with their workplace plans over time and categorizes those actions as positive or negative. Continuing a trend that began in 2009, positive actions participants starting contributions for the first time or increasing contributions to their plan significantly outnumbered negative actions (stopping or decreasing contributions). The number of starts was 2.6 times the number of stops, while increases were 2.2 times more common than decreases for the quarter. Employees age 30 and younger and those age 50 and older were responsible for the majority of positive actions in the quarter 41% and 36%, respectively. These groups proportion of positive actions was significantly greater than their percentage of the overall population. Employees taking positive actions 41% 23% 36% More employees are starting or increasing contributions 3Q 2013 YTD 2013 Starts 73, ,355 UNDER AGE 30 AGE AGE % 75% 50% 25% 0% Increases Totals Stops Decreases Totals Employees continue to take positive action 2009 Positive Negative 64, , ,753 28, ,998 28,798 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 472, ,719 57, ,717 1Q 2Q 3Q YTD Positive actions occur when participants start contributions for the first time or increase contributions to their plan. Negative actions occur when participants stop or decrease contributions to their plan. The data indicates that employers are successfully enrolling young employees. This is likely a result of how plans have taken advantage of the streamlined process of adding employees to their plans, including automatic enrollment. For employees approaching retirement, we have made a concerted effort to engage them by offering retirement readiness education and consultation. We see that employees age 50 and older seem to feel a sense of urgency about preparing for their impending retirements. They are taking action to build their retirement assets and to increase their own financial wellness. The employees in between those age 31 to 49 are likely juggling multiple financial priorities. They may find it difficult to prioritize retirement and thus may be more likely to ignore, decrease or halt their contributions in order to fund shorter-term obligations. For employees in this middle age group, employers have an opportunity to reinforce the importance of investing in their retirement plans and increasing contribution rates. Employers may consider adopting a proactive communications approach, using tactics that reinforce the investing message with employees who are already doing so, acknowledging the financial realities that 30- and 40-somethings face, and emphasizing the importance of retirement plan contributions to total financial wellness.

3 401(K) WELLNESS SCORECARD FOR QUARTER ENDING SEPTEMBER 30, Plan design spurs employee action Employers continue to recognize the critical role plan design can play in supporting and motivating employees as they work to improve financial wellness. Automatic enrollment is a particularly effective tool that relies on the human tendency toward inertia to produce a positive outcome: Employees can opt out of the plan, but if they do nothing they will continue to participate. In the third quarter, we saw a 7% increase over the first quarter of 2013 in the number of plans that adopted auto enrollment. In addition, 26% more auto-enrolled employees increased their contribution rates than did in the first quarter. Automatic-increase features boost employees contribution rates over time. The number of plans that adopted auto increase grew 17% compared to the first quarter of Nearly a third (31%) of eligible plans have now adopted auto-increase features, as employers continue to make it easier for employers to contribute and contribute more. In addition, the number of plans offering Advice Access* grew 7% from the first quarter this year. In total, 47% of all eligible plans now provide Advice Access to their employees. This is a clear indication that employers understand the need for, and value of, expert advice for employees. Contribution rates and plans with auto-increase continue to trend upward Employees who increased contribution rates Eligible plans with auto increase CONTRIBUTION RATES 26% 31% 3Q vs. 1Q AUTO-INCREASE 3Q vs. 1Q

4 401(K) WELLNESS SCORECARD FOR QUARTER ENDING SEPTEMBER 30, Mobile and online access drive employee engagement with retirement plan Employees are eager to understand their retirement plan options, and they want to learn how to build retirement assets. The most recent data from our Benefits OnLine (BOL) website demonstrates that employees respond enthusiastically when offered this information in a convenient, easy-to-use format. For example, an increasing number of employees are engaging with their plans via mobile devices. Consider the enormous growth in mobile visitors since the beginning of the year. (Mobile data is through September 2013.) Mobile visits to BOL are up from Rolling mobile unique participants 180, , , , ,000 80,000 60,000 40,000 20,000 0 JAN FEB MAR APR MAY JUN JUL AUG SEPT More participants are accessing our site from mobile devices Percent of users who access BOL on mobile devices 12% 10% 8% 6% 4% 2% 0% JAN FEB MAR In addition, one in four (24%) unique visitors to BOL visited the Education Center for the year through August 31, This figure illustrates that many participants are looking for educational materials when they access their 401(k) accounts. Employers and providers can and should do more to meet these needs. These trends make a strong case for employers to engage employees with online information and tools that are optimized for mobile devices. The rapid growth in mobile engagement also provides an opportunity to connect with the youngest employees, who tend to be early adopters and enthusiastic users of technology. APR MAY JUN JUL AUG SEPT 9 out of 10 U.S. adults have a mobile phone 2

5 401(K) WELLNESS SCORECARD FOR QUARTER ENDING SEPTEMBER 30, Individual attention and simple steps help employees move forward As employers refine the ways in which they provide education to employees, they should consider the results of two particularly effective programs from Bank of America Merrill Lynch. The power of one-on-one meetings Employers who choose to hold group meetings to discuss retirement (including details about contribution rates and investment options) and then follow the group sessions with one-on-one meetings with a Merrill Lynch financial advisor show higher success. The results have been striking: A seminar followed by one-on-one interaction currently has a 61% success rate, compared to a success rate of just 8% following seminars alone. (Actions that constitute success include enrollment in the plan, contribution increases and enrollment in Bank of America Merrill Lynch s Advice Access program.) Seminar One-on-one interactions help improve success rate More options for conversations with employees One-on-one meetings with employees traditionally have been held in person. But technological advances make the following avenues convenient for employers and employees: Face-to-face meetings Phone conversations Online chats 61% 8% SUCCESS RATE One-on-one interaction In-person online enrollment SUCCESS RATE Seminars alone Easy action opportunities help employees move forward Another method that has proven effective is employers using ipads in employee group meetings to facilitate action. After a short presentation, employees were given the chance to enroll immediately. Nearly all eligible employees take action when the ipads are made available to them. Increase in adoption of Express Enrollment 27% 3Q vs. 1Q Employers recognize the appeal and effectiveness of simple tools: Adoption of our Express Enrollment service, which streamlines the enrollment process by providing dropdown menus for contribution rate and investment choices, grew 27% in the third quarter of These dropdown menus help remove stumbling blocks for employees, who often freeze in the face of open-ended investment decisions. Express Enrollment gives employees an easy way to make elections, request help if they need it and then move on. These results affirm an important principle about plan communications: When employers provide simple, clear direction, employees find it easier to take action. The case studies presented are intended to illustrate the products and services available through Bank of America Merrill Lynch; they should not be considered an offer, solicitation or endorsement. These illustrations may not be used with the general public under any circumstances. This material does not take into account your plan s objectives, financial situations or needs and is not intended as a recommendation, offer or solicitation for the purchase or sale of any security, financial instrument, or strategy. Before acting on any information in this material, you should consider whether it is suitable, and if necessary, seek professional advice. Merrill Lynch Financial Advisors do not provide investment advice on plan assets outside of the Advice Access Service.

6 401(K) WELLNESS SCORECARD FOR QUARTER ENDING SEPTEMBER 30, Moving ahead Results from the third quarter of 2013 indicate that plan sponsors can have a positive impact on employee financial wellness by providing easy access and simple choices. Automatic features are particularly effective and can be reinforced with the following strategies: Target communications based on life stage or age segments. Scenarios that are relevant and focus on people like me resonate with employees. Give employees information in mediums that work for them. Employees are eager to engage with their plans when they can do so in a format that is convenient, appealing and easy to use. Make it easy to take action. Employees respond enthusiastically to technology and other solutions that streamline and simplify plan-related decisions. Employers can adopt one-on-one meetings and other approaches to help boost employees interest in financial wellness. For more information Contact your Bank of America Merrill Lynch representative or call for details on the action steps you can take to potentially affect positive participant outcomes and help improve the vibrancy of your 401(k) plan. You also can visit us online at benefitplans.baml.com or us at benefitplans@baml.com. * Advice Access is an investment advisory service that offers personalized, unbiased savings and investment recommendations provided by an independent financial expert, Ibbotson Associates. Individualized, comprehensive and highly flexible, Advice Access can help put plan participants on track when pursuing their retirement goals. Participants can use this service in one of three ways: PersonalManager Managed account solution with periodic reallocation and rebalancing. For the Do-it-for-me investor. Portfolio Rebalancing Asset allocation with periodic rebalancing. For the Do-it-with-me investor. One-Time Asset Allocation Asset allocation based on a point-in-time analysis; will not factor in future changes in personal information or current market conditions. For the Do-it-myself investor. The Advice Access service uses a probabilistic approach to determine the likelihood that participants in the service may be able to achieve their stated goals and/or to identify a range of potential wealth outcomes that could be realized. Additionally, the recommendations provided by Advice Access do not consider an individual s comfort level with investment risk and may include a higher level of investment risk than a participant may be personally comfortable with. Participants are strongly advised to consider their personal goals, overall risk tolerance and retirement horizons before accepting any recommendations made by Advice Access. Participants should carefully review the explanation of the methodology used, including key assumptions and limitations, which is provided in the Advice Access disclosure statement. It can be obtained through Benefits OnLine, or through your Bank of America Merrill Lynch representative. IMPORTANT: The projections or other information shown in the Advice Access service regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each use and over time Bank of America Corporation. All rights reserved. ARJ97DJW 12/ Client balances consist of assets under management, client brokerage assets and deposits of GWIM retirement plan participants held at Bank of America, N.A. and affiliated banks. As of September 30, 2013, Retirement and Benefit Plan Services had proprietary 401(k) balances of $114.1 billion. 2 Pew Research Center, Sept. 2013, ipads are a registered trademark of Apple, Inc.