Teach Investment Basics, Support Smart Investment Decisions

Research from CREATE/Principal indicates more financial literacy is
needed to help employees with retirement planning

DES MOINES, Iowa–(BUSINESS WIRE)–Longer life expectancy, coupled with rapid adoption of defined
contribution retirement plans, is driving the need for more basic
investment education worldwide, according to a report published today by
CREATE-Research and Principal Financial Group®.

“Employees around the world are bearing the risk and responsibility of
managing their retirement, and we must do more to help ensure they
aren’t going to outlive their money,” said Jim McCaughan, CEO of
Principal Global Investors. “Plan features such as auto-enrollment and
default investment options have been an important first step to
increasing participation, but they should be supplemented with education
around the basic rules of investing.”

The paper, Financial Literacy: Smoothing the path to improved
retirement savings
, is the first of the CREATE/Principal series of
three whitepapers which will discuss a variety of topics.

The first paper identifies how common missteps in retirement planning
can be helped through increased participant education that emphasizes
the basics of investing – key techniques, common risks and investment
principles. The report found those basics missing from much of the
guidance provided to plan participants.

“New government education initiatives are helping to close the knowledge
gap, but a holistic approach is needed that includes plan sponsors,
participants, financial advisors and asset managers,” said Dr. Amin
Rajan, CEO of CREATE-Research and author of the report. “Participants
need objective, jargon-free, emotionally-inspired education that shows
how knowledge of investment basics can benefit their retirement nest

The report identified implications for all future retirees in managing
their pensions, especially Millennials, who are expected to spend as
many years in retirement as they do in the workforce if the retirement
age doesn’t rise along with life expectancy.

“Even Millennials with advanced education and high income levels tend to
have low levels of financial literacy,” said Dr. Rajan. “Fortunately,
you do not have to become an expert to make progress in your retirement
savings. Good plan design, coupled with a baseline understanding of the
costs and benefits of major asset classes, will go a long way.”

The full white paper is available on: https://www.principalglobal.com/create/financial-literacy-smoothing-path-improved-retirement-savings

About Principal®

Principal helps people and companies around the world build, protect and
advance their financial well-being through retirement, insurance and
asset management solutions that fit their lives. Our employees are
passionate about helping clients of all income and portfolio sizes
achieve their goals – offering innovative ideas, investment expertise
and real-life solutions to make financial progress possible. To find out
more, visit us at principal.com.


CREATE-Research is an independent think tank specializing in strategic
change and the newly emerging business models in global asset
management. It undertakes major research assignments from prominent
financial institutions and global companies. It also undertakes advisory
work for senior decision makers in reputable organizations across Europe
and the U.S.

Its work is disseminated through high profile reports and events which
attract wide attention in the media. Further information can be found at www.create-research.co.uk.


Principal Financial Group
Media Contact:
Cait Suttie,
Slusark, 515-362-0482