Financial News

BNY Mellon Master Trust Index Highlights Yearly Growth - Fri, 08/17/2018 - 20:08

The second quarter 2018 update of the BNY Mellon U.S. Master Trust Universe index shows a median return of 0.63%, rebounding to positive performance after posting a negative first quarter result.

As the firm explains, the BNY Mellon U.S. Master Trust Universe offers peer comparisons of performance by pension plan type and size. It consists of 490 corporate, foundation, endowment, public, Taft-Hartley, and health care plans with a total a market value of more than $2.1 trillion and an average plan size of over $6.7 billion.

This sizable group of plans posted a strong one-year return of 7.66%. According to the index, this figure surpasses the three-year annualized return of 6.70% while underperforming the five-year annualized return of 7.77%.  

For the shorter term, the index shows corporate and health care plans underperformed, with quarterly returns of 18 basis points, and 41 basis points, respectively.

“Endowments continued to benefit from higher allocations to alternatives and lower allocations to U.S. fixed income investments versus other plan types,” observes Frances Barney, head of asset owner product management and global risk solutions. “They overweighted alternatives at a 44% allocation versus 22% for the Master Trust Universe as a whole, and underweighted U.S. fixed income at 10% versus 28% for the whole.”

U.S. Equity was the top-performing asset class tracked by the index, posting a one-year gain of 14.39%. Real estate continued a run of positive annual returns (8.71%), and non-U.S. equity also finished the year with solid gains (8.21%)—despite dropping 2.30% in the second quarter.

U.S. fixed income had a median quarterly return of negative 0.12%, versus the Barclays Capital U.S. Aggregate Bond Index return of negative 0.16%. Non-U.S. fixed income had a median return of negative 5.52%, versus the FTSE World Government Bond Non-US Index return of negative 5.11%. Real estate had a median return of 2.21%, versus the NCREIF Property Index result of 1.81%.

Additional data and information are available on

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Categories: Financial News

Securian Expands Financial Wellness 360 for Plan Sponsors - Fri, 08/17/2018 - 18:44

Back in February, Securian launched a comprehensive financial wellness program for its group insurance customers called Financial Wellness 360.

This week the firm introduced a customized version of the financial wellness program for its plan sponsor clients.

The Financial Wellness 360 program is comprised of three underlying solutions aimed at improving employees’ ability to manage money. First, the program delivers SmartDollar, a well-known online program that takes a holistic approach to financial wellness. As Securian puts it, SmartDollar “acts as an online personal financial coach.” The program helps navigate “seven baby steps for greater financial security.” 

The Financial Wellness 360 program next features Advisor Connection, a program that offers “convenient worksite seminars allowing employees to learn about financial principles that are relevant to them, including personal finance and retirement strategies.”

The final part of the Financial Wellness 360 program is Lifestyle Benefits, a suite of self-service resources that help employees “address today’s financial challenges and prepare for tomorrow.”

More information on the program is available here.

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Categories: Financial News

Retirement Industry People Moves - Fri, 08/17/2018 - 17:34

LCG Associates has promoted Zach Brumett to consultant. He is based out of the Atlanta office.

Brumett has six years of industry experience and joined LCG in 2014. His responsibilities include investment strategy development, manager due diligence, special research projects, and providing investment advice to clients. Brumett began his career at LCG as an investment analyst.

Previously, Brumett was an investment analyst at RVK, Inc. and was responsible for providing support in conducting asset allocation studies, structure studies, performance reports, and other projects as needed. He also led the Capital Markets Research and Alt Invest Task Forces in creating capital markets commentary and evaluating private equity managers, respectively.

Brumett is a CFA Charterholder and is a member of the CFA Society of Atlanta. He is also a Chartered Alternative Investment Analyst (CAIA) Charterholder. Brumett graduated from The University of Tennessee with a bachelor’s in finance.

Mercer Acquires Investment Consulting Brand

Mercer has signed a definitive agreement to acquire the investment consulting, alternatives consulting and wealth management operations of Pavilion Financial Corporation (together Pavilion). Pavilion is headquartered in Winnipeg with offices across North America, in London and in Singapore.

Mercer intends to use the Pavilion brand for investment consulting services provided to the institutional not-for-profit and insurance client segments. As part of Mercer, Pavilion clients will have access to Mercer’s global strategic and manager research and investment capabilities, including outsourced chief investment officer and digital delivery capabilities, while retaining access to customized, strategic advice delivered by a specialist consultant.

This transaction is subject to customary conditions to closing, including regulatory and shareholder approvals, and is expected to close in Q4. 

AndCo Acquires Public Funds Consulting Practice

AndCo Consulting has acquired Summit Strategies’ public funds consulting practice. Summit is an independent, national institutional consulting firm located in St. Louis, Missouri.  The acquisition is hoped to increase AndCo’s presence in the public plan market, and post-acquisition AndCo will provide investment consulting services to $115 billion in institutional client assets across 33 states, the District of Columbia, Canada, and Bermuda.

“We look forward to servicing these clients within the independent model and high-quality custom service standard to which they are accustomed. Finding the right fit for our public fund clients was of the utmost importance in our selection process,” says Steve Holmes, president/CEO of Summit Strategies Group. “We have had a long mutual respect with AndCo as competitors in the institutional consulting space and believe they are a great fit for our public funds practice.” 

The transaction will close on October 15.

LeafHouse Implements VP of Key Accounts

LeafHouse Financial has added Ben Bates as vice president of key accounts. Bates is responsible for partnering with advisers, third-party administrators (TPAs), plan sponsors, recordkeepers and broker/dealers to find solutions for the plan sponsor and plan participants.

Bates joins LeafHouse with a 17-year background in large case acquisition and relationship management. He has created relationship manager teams to support complex client needs and to improve the client experience at both public entities and private companies. At Nationwide Retirement Solutions Bates handled business management activities and drove operational efficiencies to improve outcomes for participants. As the National Client Relationship Manager, Bates was responsible for sophisticated corporate 401(k) and 403(b) plans.

OneAmerica Appoints SVP of Enterprise Operations

OneAmerica has announced the appointment of Jason Lilien as senior vice president of enterprise operations for the Indianapolis-based financial services company. Lilien brings nearly 25 years of financial and operational experience to the newly created role. 

Lilien most recently served as managing director and global co-head of operations for Goldman Sachs Private Wealth Management. He was responsible for a budget of more than $150 million and 475 operations professionals across six global locations. His 22-year Goldman Sachs career also included a nine-year stint as global head of banking operations for custody, reporting and private banking operations, Private Wealth Management, where he established operations for Goldman Sachs’ Salt Lake City office. Lilien holds a FINRA Series 7 license and earned a bachelor’s degree in business administration from State University of New York at Buffalo’s School of Management. 

“Jason’s business acumen and operational discipline make him well-suited to lead our operating units that provide ongoing service to customers across the enterprise,” says Jeff Holley, OneAmerica executive vice president of finance, operations and institutional markets. “He and his team will help us better leverage technology and other resources to improve our efficiency and effectiveness throughout our claims, contact centers, in-force service and participant services areas.” 

Lilien is a member of the SIFMA private clients operations committee and has been active in the Salt Lake community, serving the Fourth Street Clinic as finance committee co-chair, and as senior sponsor for Goldman Sachs’ Salt Lake City Veterans Network and Disability Interest Forum. 

Lilien will begin his new role on September 10.

Relationship Manager Joins SageView’s Southeast Division

SageView Advisory Group has added Stacy Walters as a relationship manager in the Southeast region, joining the team in West Palm Beach, Florida.

Stacy’s primary focus is to help clients manage their qualified and nonqualified retirement plans, including 401(k) plans, 403(b) plans and various other defined benefit (DB) and defined contribution (DC) plans. She began working in the financial and retirement industry in 1993, spending most of her career as a relationship manager. She has extensive experience with helping organizations meet their fiduciary responsibilities, assisting with plan design, operational issues and creating educational programs to help employees reach their retirement and financial objectives.

Her knowledge in the retirement plan space is furthered by her time serving as the 401(k) plan administrator for a large organization’s human resources department.

Stacy graduated from Bellevue University in professional banking operations and leadership. She also holds the Accredited Investment Fiduciary (AIF) and Qualified 401(k) Administrator (QKA) designations.

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Categories: Financial News

Physical, Mental and Financial Wellness Viewed as Equally Important - Fri, 08/17/2018 - 16:34

In collaboration with the National Business Group on Health and Kantar Consulting, Alight Solutions has published its 2018 Consumer Health Mindset Study.

The research report is aptly subtitled “engaged and confused,” and it underscores the enormous changes workers have seen over the last decade in the way employers think and talk about employee health and wellbeing. The report also addresses the growing importance of financial wellness programming, both from the perspective of employees and employers.

Even as they face an evolving health and wellbeing landscape, the share of employees who say they are doing everything within their power to promote and maintain good health increased by 8% over 2017, standing now at 60% of employees. In 2014, this figure was 52%. Tied to this, the confidence of moderate-volume and high-volume users of health care is also up in 2018. Fifty-three percent now say they can “understand and manage how I get services,” while 50% say they can “understand and manage how I pay for services.”

Less promising, 25% still say “the system and benefits are so difficult that I give up and just hope for the best,” but this number is down from 32% last year.

“As the years pass, more consumers are seeing value from employer wellbeing programs—both to themselves and to the organization,” the survey report states. “Consumers also indicate that the broad spectrum of wellbeing concerns is increasingly important in their personal lives. Unfortunately, there’s been almost no improvement in consumers’ understanding of where to go for the health care information they need.”

Asked if employee health and financial wellness promotion programs make their company a more attractive place to work for potential colleagues, 77% responded in the affirmative. At the same time, 59% suggested such wellness programs “are one of the reasons I stay at my job.” Asked to rate the impact of wellbeing programs on their personal lives, four in five employees said workplace mental health support, physical health support and financial wellbeing support are all directly important. Slightly less than half of employees said “social support programs” are important to their personal lives.

Notably, the importance of financial wellbeing is up five points this year, which puts it on par with emotional and mental wellbeing and physical wellbeing.

“Further, while emotional and mental wellbeing is still rated as very important, this category fell five percentage points from 2017,” the research explains. “These findings suggest that consumers now see physical, mental and emotional, and financial wellbeing as equally important. A new finding is tied to professional and career wellbeing. While 55% of consumers consider it important, it’s less important for Gen Xers and Boomers.”

Other notable findings show just 23% of younger Millennials rate the state of their financial wellbeing as “going well,” compared to 41% of Baby Boomers. Among the younger Millennial group, 36% say their level of debt is ruining their quality of life, and 53% say student loans significantly impact their ability to save for the long-term future.

According to the survey results, the percentage of consumers reporting “never” engaging in a specific set of savvy health care use behaviors—like comparing costs for recommended medical services to find the best value—has dropped slightly on six out of seven behaviors.

“While this decrease suggests some positive change, the large percentage of consumers that never take these actions also indicates a lot of room for improvement,” the report concludes. “Consumers with higher health care use and health literacy consistently respond with an increased likelihood of taking these actions.”

The full report is available for download here.

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Categories: Financial News

Financial Finesse Designs Financial Wellness Education Program - Thu, 08/16/2018 - 17:12

Financial Finesse has created an online continuing education course for human resources (HR) and financial professionals on Creating an Effective Financial Wellness Program.

The four-to-five-hour continuing education (CE) course, available to retirement industry professionals on, provides support in planning and incorporating holistic financial wellness benefits, according to Financial Finesse. The program, which approves credits for designations including the HR Certification Institute, Society of Human Resources Management Professional Development, and Certified Financial Planners (CFPs), seeks to reduce financial stress in the workforce while assisting in retirement readiness.

Financial Finesse points out the need for newly developed, comprehensive programs to augment and certify an employee’s retirement preparedness. According to a PwC survey, 54% of employees would rather make their own financial choices, but prefer to have a professional validate the decision.

More information about the program can be found here.

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Categories: Financial News

New Website for The Retirement Advantage Has Improved Navigation - Thu, 08/16/2018 - 16:53

The Retirement Advantage (TRA) has revamped its website,

It has made the navigation system more intuitive with an improved menu functionality that directs the most relevant information to the end user. The website is also fully responsive with mobile devices, making it easy to view on a wide range of web browsers and portable devices, and viewers can share information on all major social networking sites.

In addition, the new website introduces a range of content and videos, a blog, a library of plan design comparison tools, retirement calculators, administrator user guides, account access and comprehensive retirement plan information. The website will be updated on a regular basis with news of product launches, business activity, corporate milestones and industry related information.

“We are excited about our new website launch and the robust information it provides for clients, providers, partners and prospects, to better understand TRA’s best-in-class service offerings,” says Matt Schoneman, president of TRA. “We believe that this new site will allow our visitors to have a very informative experience as we continue to grow and increase our market presence.”

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Categories: Financial News

Program Allows Participants to Move Matches to Student Loan Debt - Thu, 08/16/2018 - 16:51

BenefitEd has launched Employee Choice, a program allowing employees to split their employer-matched retirement funds to pay down their student loan debt.

BenefitEd said it created this program since many workers are split between saving for retirement and paying down their student loan debt. In fact, citing an Ipsos study, BenefitEd says that 69% of Millennials aren’t saving for retirement because of more pressing financial demands.

According to the Financial Industry Regulatory Authority (FINRA), because many Americans are not saving in their workplace retirement plans, they leave $24 billion in employer contributions on the table each year.

BenefitEd notes that with Employee Choice, sponsors can offer a student loan repayment benefit without changing their benefits costs. In addition, because it is a separate service from a company’s retirement plan, they do not need to amend their retirement plan summary documentation.

More information is available at

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Categories: Financial News

Plaintiff in NYU 403(b) Plans Lawsuit Asks for Committee Members to Be Removed - Thu, 08/16/2018 - 16:47

The plaintiff in a lawsuit over New York University’s 403(b) plans has filed a motion to amend the court’s decision by ordering the removal of two plan committee members.

In her decision, U.S. District Judge Katherine B. Forrest of the U.S. District Court for the Southern District of New York said “plaintiffs have not proven that the Committee acted imprudently or that the Plans suffered losses as a result.” However, she also noted “deficiencies in the Committee’s processes—including that several members displayed a concerning lack of knowledge relevant to the Committee’s mandate.”

In the argument to support the motion to amend the court’s decision, the plaintiff says the court’s factual findings regarding two committee members point to the unmistakable conclusion that they repeatedly failed to exercise the level of “care, skill, prudence, and diligence” that an objectively prudent fiduciary responsible for a $6 billion retirement plan would have used, and are unfit to serve in that capacity going forward.

“Thus, to protect the Plans’ participants from the significant risk of future losses if imprudent and unqualified fiduciaries remain on the Committee, the Court should supplement its findings to order that [they] be removed and barred from serving as fiduciaries to the Plans, and amend the judgment accordingly,” the court document says.

Citing other court opinions, the plaintiff argues that if a fiduciary is found to be in breach of its duties, the Employee Retirement Income Security Act (ERISA) grants courts “wide discretion in fashioning equitable relief to protect the rights of pension fund beneficiaries.” Thus, “a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed” by ERISA is liable not only for any monetary losses caused by the breach, but also “shall be subject to such other equitable or remedial relief as the court may deem appropriate, including removal of such fiduciary.” Removal is appropriate when the fiduciaries have engaged in “repeated or substantial violations of [their] responsibilities.”

The document goes on to say that a finding of bad faith or disloyal conduct is not required for removal. Similarly, a monetary loss to the plan is not a prerequisite to removal. The proper inquiry is merely whether the fiduciary’s “conduct has violated the prudence standards of” ERISA.

The plaintiff points out that Forrest specifically found that one of the committee members does not have the depth of knowledge appropriate to oversee a plan the size of the NYU Faculty and Medical

Plans and “displayed a surprising lack of in-depth knowledge concerning the financial aspects of managing a multi-billion-dollar pension portfolio.” Forrest also found that in a number of instances, the committee member “appeared to believe it was sufficient for her to have relied rather blindly on the plan adviser’s expertise,” which was “inappropriate as a matter of law.” The plaintiff argued that this committee member’s ignorance of financial matters shows that she simply lacks the “skill” required by ERISA to oversee a multi-billion dollar defined-contribution portfolio.

As for the other committee member the plaintiff is asking to be removed, Forrest found she “failed to demonstrate a satisfactory understanding of … her role as a fiduciary” and “did not consider herself a fiduciary.” The committee member testified that she does not “review the plan documents” because her staff reviews them, yet the staff member herself “failed to demonstrate a firm grasp on these documents.”

Forrest found the committee member to be “unfamiliar with basic concepts relating to the Plans, such as who fulfilled the role of administrator for the Faculty Plan,” that she did not “know enough about variable annuities to be able to comment on whether they should be in these plans,” and “could not recall whether there were ‘specific underperformance metrics or thresholds that have to be triggered for a fund to be put on the watch list.’” The committee member’s excuse for her inability to remember plan details—that she has a “big job” in human resources—“suggested that [she] does not view herself as having adequate time to serve effectively on the Committee,” Forrest said.

The plaintiff concluded that this committee member has demonstrated that she is either unwilling or unable to devote adequate time and effort to serve effectively on the committee. “Removing [her] will further ERISA’s purposes of protecting the Plans’ participants against the risk of loss due to imprudent fiduciary conduct,” the court document says.

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Categories: Financial News

Investment Product and Service Launches - Thu, 08/16/2018 - 16:35

The US SIF Foundation has released a comprehensive guide for money managers on how to incorporate sustainable, responsible and impact investing at their firms. The Money Manager Roadmap provides best practices and practical steps asset managers can take to develop and enhance sustainable investing strategies.


The guide is the second released by the US SIF Foundation this year. The roadmaps are a core deliverable from US SIF’s strategic plan goal to identify and disseminate information about best practices within the field and provide tools for practitioners to undertake a rigorous and comprehensive approach to sustainable and impact investing. A roadmap for financial advisers was released earlier this year, and asset owners will be the focus of the third and final guide in the series. 


The Roadmap was designed with input from portfolio managers at US SIF member firms and covers the following steps, from introductory to advanced, for money managers to develop sustainable investment programs and products: establish board and senior level oversight; identify sources of ESG (environmental, social, and governance) data, research and training; develop and implement an ESG incorporation strategy; develop and implement an investor engagement strategy; measure and manage impact; and participate in building the field.


“As the field expands, we consistently hear that asset managers need basic information about how to get started in creating ESG-focused products and strategies. We also believe that asset managers need to continually build out their offerings and provide transparency about their investing process,” says Lisa Woll, CEO of the US SIF Foundation. “The Money Manager Roadmap is a tool that asset managers can use whether they are just starting out or are experienced practitioners moving toward a more rigorous practice.” 


The guide is now available on US SIF’s website and will be distributed to asset managers throughout the year.


Wells Fargo Updates Personalized Solution


Wells Fargo Institutional Retirement and Trust has created the newest iteration of its Target My Retirement solution, providing 401(k) plan participants access to a personalized investment solution to help them achieve their retirement income goals.


Target My Retirement offers an internally managed, factor-based index collective fund array charging lower fees and has the potential for greater risk-adjusted returns, while also maintaining the essence of the product design to create a personalized glide path based on the participant’s individual situation.


The underlying factor-based collective funds were created by Wells Fargo Asset Management. Morningstar Investment Management LLC—a registered investment adviser (RIA) and subsidiary of Morningstar, Inc., retained by Wells Fargo as an independent financial expert to provide advice in connection with Target My Retirement—created the participant investment strategies.


“We continue to believe that the future of retirement planning—and the probability of a successful outcome—comes down to moving away from ‘one size fits all’ approaches and drawing on more personalized solutions,” says Joe Ready, head of Wells Fargo Institutional Retirement and Trust. “This version of Target My Retirement builds on this belief by combining the investment strength of Wells Fargo Asset Management with the allocation expertise of Morningstar Investment Management to deliver what we see as a compelling option for plan sponsors.”


Like previous versions of Target My Retirement, the latest iteration can be used as a plan’s qualified default investment alternative, delivering an evolution in the underlying investment strategy of the product at a cost of 24 basis points, including both the product administration and investment fund expenses.


Features of the enhanced Target My Retirement solution includes close to 600 possible portfolios; personalization; factor-based investment options; and a process focused on controlling risk and return drivers. 



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Categories: Financial News

Participants Report Diverse Communication Preferences - Thu, 08/16/2018 - 16:01

CUNA Mutual Retirement Solutions has published the results of its 2018 Retirement Education Preferences Survey.

The survey asked participants to rank their interest in learning about different financial and retirement planning areas, such basic and advanced investment principles, budgeting and managing debt, and preparing to transition to retirement. Overall, survey respondents were most interested in “understanding the tools and resources available” to help—ranked as the top area of interest by survey participants 25% of the time.

“This may indicate employees are interested in maximizing their returns and learning how their plan can help them prepare for retirement, but they are not certain they have all the information they need,” the survey report states. “Interest in basic financial wellness emerged as a secondary theme. This may indicate that participants are facing challenges that impact their ability to increase their overall and retirement savings.”

Generally, the survey shows younger plan participants want to learn about budgeting and managing debt.

“Retirement is not in the near future for this younger age group, and their interest in retirement planning topics reflects that, especially when compared with their interest in underlying financial wellness subjects,” the firm reports. “Survey respondents in this age group ranked budgeting and managing debt as the top priority 35% of the time.”

According to the survey, Millennials are carrying a significant amount of student loan debt that can limit their ability to save for retirement. Among this age bracket of respondents, understanding available tools and resources was ranked as a top area of interest followed by smart retirement savings practices and basic investment principles.

Among mid-career employees—defined here as those between ages 35 and 49 years—both “budgeting and managing debt” and “understanding tools and resources available” ranked as the top subjects of interest. “Smart retirement savings practices” came in at 21%, followed by “basic investment principles” at 13%.

As noted in the survey report, respondents over the age of 50 are much closer to retirement, and therefore more interested in getting ready for that transition.

“Preparing to transition into retirement was ranked as the top interest 31% of the time, while understanding tools and resources was ranked as the top interest 26% of the time,” the report notes. “Smart retirement savings practices were solidly ranked in the middle of this age group’s interests, followed by budgeting and managing debt and investment principles (both basic and advanced). Plan participants in the 50 and up age group are thinking about the transition to retirement because it is on the horizon, while the younger age groups are more preoccupied with budgeting and managing debt, which are building blocks leading to long term financial stability.”

Preferences for retirement focused communications

The CUNA Mutual survey also asked participants to rank their interest in retirement education delivery options.

“The responses showed diversity in learning preferences when it comes to retirement and financial topics,” the report states. “Looking at overall average survey results, there was a close tie between in-person training, short topical online videos, and self-guided learning modules as the preferred way to receive education about their retirement plans.”

Notably, all the categories received a relatively similar level of interest, according to the survey.

“Personalization is important,” the report notes. “Retirement is not one size fits all, and survey respondents know that. Respondents like the options of one-on-one discussions either in-person or on the phone. Personalized email messages were also a popular choice. Convenience is king. Plan participants want retirement planning education to be convenient. That means they are open to self-guided training modules that allow them learn as much or little as they need, and they like the idea of short videos, which can be watched online anytime.”

The full survey report is available for download here.

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Categories: Financial News

Plan Sponsors Stepping Up Their Auto Enrollment Game - Thu, 08/16/2018 - 15:30

In an analysis of the 22,600 401(k) plans that Fidelity Investments administered as of the end of the second quarter, 33% automatically enrolled new employees into their plans, up from 15% in 2008. Among the largest companies, those with more than 50,000 employees, 61% automatically enrolled participants.

The average default savings rate ticked up to 3.9% after five straight quarters at 3.8%. Among mid-sized companies, those with 25,000 to 50,000 employees, the average default deferral rate is 4.6%. In addition, the percentage of employers that default participants at a 6% deferral rate or higher more than doubled in the past decade to 19%.

Plans with automatic enrollment had an 87% participation rate as of the end of the second quarter, whereas plans without automatic enrollment had a participation rate of 52%. At the end of 2017, 87% of Millennials in plans with automatic enrollment were participating in the plans, whereas 41% of Millennials in plans without this feature were participating.

Since 2008, the average savings rate among employees automatically enrolled has risen from 4% to 6.7%, and 63% of automatically enrolled participants in the past 10 years have increased their savings rate.

“As retirement savings plans continue to evolve to meet the changing needs of today’s workforce, it’s clear the one feature that has really had a positive impact on the retirement landscape over the past decade is auto enrollment,” says Kevin Barry, president of workplace investing at Fidelity Investments. “Auto enrollment positioned an entire generation of workers to build their retirement nest eggs.”

As of the end of the second quarter, the average 401(k) balance was $104,000, just under the all-time high of $104,300 in the fourth quarter of 2017. The average balance is up 6% from a year ago. The average individual retirement account (IRA) balance was $106,900, a 2% increase from the first quarter of the year and nearly a 7% increase from a year ago. The average 403(b) account balance was $83,400, nearly a 2% increase from the first quarter and a 5% increase year-over-year.

The percentage of workers with an outstanding 401(k) loan dropped to 20.5%, the lowest percentage since it was 19.9% in the second quarter of 2009. Among Gen X workers, who have historically had the highest outstanding loan rate, the percentage dropped for the third straight quarter to 26.%. The percentage of new loans initiated dropped for the second straight quarter to 9.7%, the lowest mark since the first quarter of 2017.

More Millennials are turning to IRAs for retirement savings. Their average balance as of the end of the second quarter was $15,150, a 9% increase from the previous quarter. The number of Millennials making contributions to an IRA increased 19% from a year ago.

The number of people with $1 million or more in their 401(k) increased by 49,000 people from a year ago to 168,000. Twenty-one percent of those people are women.

Among IRA holders, the number of people with $1 million or more in their account was 156,000, 26% of whom are women.

“The stock market’s performance over the past several years has definitely helped retirement savers, but now would be a good time for investors to take a moment and make sure they are doing their part to meet their retirement goals,” Barry says. “Markets may go up and down, but there are a number of steps individuals can take, such as considering a Roth IRA, increasing your savings rate and avoiding 401(k) loans, which can play an important role in their long-term savings success.”

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Categories: Financial News

Americans’ Biggest Financial Worry is Retirement Savings - Thu, 08/16/2018 - 14:44

Saving for retirement is Americans’ biggest financial worry, according to a survey by Younger Baby Boomers, those between the ages of 54 and 63, and Gen Xers, those between the ages of 38 and 53, are the most stressed about retirement, with 25% and 22% of these demographic groups, respectively, saying so.

Overall, among people of all age groups, saving for retirement is keeping 18% up at night.

Seventy-seven percent of older Millennials, those between the ages of 28 and 37, lose sleep over money, work, relationships and more. Forty-three percent of this age group say that money has caused them restless nights. Twenty-four percent say they are losing sleep because of their credit card debt, 20% say they are losing sleep because of worries about saving for retirement, and 17% say they are losing sleep over worries about the monthly rent or mortgage.

Thirty-nine percent of younger Millennials, those between the ages of 18 and 27, say that work has caused them to lose sleep, whereas 29% each of Gen Xers and Baby Boomers say the same. Thirty-six percent of younger Millennials are stressed about money matters, and 32% are losing sleep because of family relationship issues, romantic partners (31%) and/or friends (24%).

Overall, 50% of Millennials are losing sleep over relationships, compared to 36% of older generations. Seventeen percent of Millennials are losing sleep because of educational costs, compared to 6% of their elders.

“Millennials have a lot to worry about,” says Amanda Dixon, an analyst with “The overall economy is in good shape, but wages are stagnant, housing costs are rising and the job market has become more competitive. It’s no wonder that many 20- and 30-somethings lie awake at night.”

GfK Custom Research North America conducted the online surevey for this past June.

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Categories: Financial News

Groups Question Efficiency of Offering Annuities in DC Plans - Wed, 08/15/2018 - 18:30

Some responses to 2018 Advisory Council on Employee Welfare and Pension Benefit Plans’ (ERISA Advisory Council)’s request for comments about Lifetime Income Solutions as a Qualified Default Investment Alternative (QDIA) – Focus on Decumulation and Rollovers call into question the efficiency of offering in-plan annuity options in defined contribution (DC) plans.

The Plan Sponsor Council of America (PSCA) said valid retirement income strategies encompass both annuity and non-annuity approaches.

It noted that it specifically rejects new mandates, saying that a mandate runs counter to the significant level of flexibility participants already have with regard to their individual account retirement savings plans—401(k), 403(b), 457(b) and/or IRAs. 

The PSCA recounted 2005 testimony it gave in which it noted that the baseline of retirement income provided to most workers is Social Security, and it said “there is no evidence that participants who choose not to purchase annuities through their plan (or via an IRA purchase) when they retire are harming themselves.”

The prior testimony also pointed out that DC retirement plan sponsors do not provide annuities for a variety of reasons: a plan sponsor offering an annuity option must manage attendant administrative and compliance requirements; sponsors offering a plan annuity option assume fiduciary responsibly for selecting the annuity vendor; sponsors know that where annuity options are offered they are not utilized; their own employees have not asked for an annuity option; and sponsors know that if a retiring participant wants to annuitize some or all of their lump sum they can do so in an IRA.

According to the PSCA, more recent money purchase pension plan experience and defined benefit plan studies show participants rarely select annuity payouts—even when an annuity is the mandated default payout option.

“Little has changed in the past 13 years,” the PSCA said. “Participant preferences have not changed and are reflected by single digit annuity take-up rates—a level of interest that, for many, perhaps most plan sponsors, does not justify the administrative cost or fiduciary risk involved in offering an in-plan annuity.”

The council also noted that other studies suggest many Americans are well-prepared for retirement and that a substantial number can accommodate their retirement income needs. It said that among financial and economic professionals, some now assert that an immediate annuity’s value changes after a severe health shock—which creates a demand for liquidity (to cover treatment costs, custodial care) and reduces the residual value of the remaining annuity payments. According to the PSCA, “Those researchers assert that for some, perhaps many, particularly those with modest or minimal accumulated assets, the most rational annuity allocation might be zero. These same professionals suggest annuitization may be a better strategy for those in their 80s where the value of mortality credits may overwhelm the health shock risk.

Increasing retirement plan coverage, participation, and contributions while reducing plan leakage can improve retirement preparation and facilitate achieving desired levels of retirement income, PSCA contends.

However, it suggested three voluntary solutions for consideration:

  • Encouraging adoption of deemed IRAs so that Roth 401(k) assets can be transferred to a deemed Roth IRA with its more favorable, more flexible distribution provisions,
  • Amend Internal Revenue Code (IRC) Section 401(a)(9), Minimum Required Distributions, to cap the mandated, annual payout at 5% of the prior year-end account balance, and
  • Department of Labor (DOL) guidance (and potentially a “safe harbor”) for voluntary adoption of a default form of non-annuity, installment distribution payout option designed to maximize guaranteed, indexed retirement income.

As did others providing testimony, the PSCA cited a Government Accountability Office (GAO) report which made recommendations for lifetime income options in 401(k)s. “Many PSCA members would agree with the first two GAO recommendations: Clarifying the safe harbor for selecting an annuity by providing sufficiently detailed criteria to better enable plan sponsors to comply with safe harbor requirements related to assessing a provider’s long-term solvency, and considering providing legal relief for plan fiduciaries offering an appropriate mix of annuity and withdrawal options, upon adequately informing participants about the options, before participants choose to direct their  investments into them,” it said.

“A clear, simple safe harbor is a necessary first step to increase the interest of plan sponsors in adding lifetime income options to their plans,” said Lynn Dudley, American Benefits Council senior vice president, global retirement and compensation policy, in its testimony. The council focused on the numerous obstacles to lifetime income options in workplace retirement plans, including fiduciary liability, lack of demand by participants and the need for greater education. Dudley’s remarks were based on an informal poll of its plan sponsor members with questions related to lifetime income in defined contribution plans.

Of the 93 company responses received by the council, only 13 (14%) indicated that their organization offers a lifetime income option as part of their DC plan. Of the 76 organizations that do not, almost two-thirds might consider such an option in the future, but for these organizations the leading cause of hesitation was “potential fiduciary liability,” followed closely by “lack of demand from participants.”

When asked to identify the most useful potential policy change to address these concerns, the most popular response was the establishment of a “better safe harbor for selecting an annuity provider,” to protect employers from lawsuits under ERISA’s fiduciary standard.

“With this low demand for lifetime income options, employers may be hesitant to take on potential fiduciary liability for an option for which few employees have expressed an interest,” Dudley said.

In its testimony, the Defined Contribution Institutional Investment Association (DCIIA) said the idea of long-tenured DC plan participants retiring and utilizing the lifetime income features in a QDIA may be less common than initially anticipated. DCIIA member feedback found the most common lifetime income solutions are various diversified investment options as well as managed accounts (36% and 34%, respectively). The prevalence of annuity-based solutions actually offered by sponsors is somewhat less (21%).

As for including lifetime income solutions in a QDIA, the DCIIA cites studies and member experiences which show as participants get older, they are less likely to hold their assets in QDIAs, therefore, not getting the benefit of lifetime income solutions.

However, the DCIIA provided ideas to encourage participants’ use of lifetime income products:

  • In general, DC plans need to become more retiree friendly. For example, if one wants to encourage lifetime income products within the plan then as a start, plan sponsors need to be encouraged to allow partial withdrawals;
  • The solutions offered need to work given participant preferences and their unique situations. We know that participants have very different circumstances, needs and wants. While a “one size fits all” solution may be reasonable for the plan’s QDIA, for many participants this may not be the ideal fit;
  • Reframing the retirement income discussion and moving the focus away from a purely asset/wealth focus could help shift participants’ mindset when considering lifetime income products;
  • Given that most participants will have retirement assets in a number of places (due to their different employers), consolidation of assets may be a key issue to facilitate a more manageable retirement. Currently it is far easier to consolidate outside of the plan. If more plan sponsors encouraged participants to consolidate other balances into their DC Plan (and other providers made it easier for people to transfer/consolidate their balances) more participants are likely to consider staying in the plan; and
  • Providing exchange or quotation services where participants can compare quotes/rates could help them feel more confident that they are getting a good deal.

The testimony highlighted that the DCIIA Retirement Income Committee is currently focused on developing a white paper addressing the “Retirement Tier.” This essentially is the suite of services, products and solutions that can be made available to assist those approaching retirement and within retirement.

Fred Reish and Bruce Ashton, partners at Drinker Biddle & Reath, LLP, agreed with DCIIA’s idea about reframing the retirement income discussion. In a statement to the ERISA Advisory Council they said, “Participant-directed defined contribution plans are, by and large, currently viewed as creators of wealth. For example, the plan document most widely read by participants is the quarterly statement, which shows a lump-sum balance in the participant’s account and the investments held by the participant—in other words, the participant’s retirement “wealth.” And, 401(k) plans are commonly referred to as 401(k) savings plans. The labels, and the conversation, need to be re-directed to 401(k) retirement income plans. That includes both a change in terminology and a change in presentation.

In addition, Reish and Ashton recommend addressing the fiduciary fear DC retirement plan sponsors have about offering lifetime income products. They say, in our experience, the greatest impediment to the continuing inclusion of retired participants in defined contribution plans, and to the introduction of new products and services into those plans, is the fear that plan sponsors have of being sued for a fiduciary breach. That fear includes: possible increased damages where retirees continue to have money in a plan; claims of fiduciary breaches where a plan sponsor changes to another recordkeeper, resulting in a loss of guaranteed benefits; and litigation about annuities provided by insurance companies if their financial condition weakens. As a result, plan sponsors prefer safe harbors where compliance is objective and obvious.”

More testimony can be found here.

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Categories: Financial News

Personal Milestones Serve as Financial Wellness Guideposts - Wed, 08/15/2018 - 18:05

The key to continued success of a financial wellness initiative is its ability to draw employees into the program and encourage them to take ongoing actions, according to the latest in MetLife’s “Financial Wellness: Creating a More Productive and Engaged Workforce” white paper series.

The third whitepaper, “Driving Engagement and Participation,” suggests today’s comprehensive financial wellness platforms have the capability to help guide employees’ decisions on some complicated matters.

Sophisticated data analytics and algorithms can determine whether employees are making transformative behavioral changes toward financial wellness or if they need a helping hand to stay on track,” the white paper states. “The most effective financial wellness programs are personalized and can reach users across various delivery channels.”

According to MetLife, most employees expect easy access to “self-service decision-support tools.”

“For instance, calculators and filtering tools can help employees approximate the amount of additional life insurance that might be needed upon the birth of a second child,” the paper notes. “Platforms may also include libraries of curated content that is continuously updated and pushed to employees based on their preferences and user history, as well as content management systems to promote breaking news and improve financial literacy.”

The research suggests employers consider linking communications with “acknowledge personal milestones or positive behaviors.”

“One example of a trigger communication might be an acknowledgement of a child’s fifth birthday, along with a reminder that it is not too early to begin a college savings fund,” MetLife suggests. “In addition to web-based platforms, regular human interaction through workshops, call centers or personal consultations are also important elements. Employees crave ‘high-touch’ one-on-one guidance to help navigate their finances.”

According to the analysis, a strong majority of employees are receptive to financial education in the workplace, with 84% describing financial wellness programs as offerings they want or need.

“Evergreen content about a company’s benefits can help employees make the connection between the company’s benefits offerings and their own personal financial wellness needs,” the white paper concludes. “Financial wellness providers should be able to provide a comprehensive library of content about student debt repayment, budgeting or life insurance. Topics can be as broad or narrow as required.”

Findings from the first white paper are accessible here; findings from the second are available here.

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Categories: Financial News

Pro-ESOP Bill Signed Into Law - Wed, 08/15/2018 - 16:04

A bill that will make it easier for companies to establish an employee stock ownership plan (ESOP) was signed into law by President Donald Trump.

Among other things, the Main Street Employee Ownership Act focuses on increasing the role of the Small Business Administration (SBA) in facilitating ESOPs by allowing the SBA to make loans to companies that they can then reloan to ESOPs. It also allows ESOP loans to be made under the SBA’s preferred lender program and updates the definition of ESOPs so that they do not have to have full voting rights to qualify.

“This law will help organizations better understand how to pursue a strategy of shared capitalism—something that our country’s founders agreed was vital to the health of our nation,” said ESOP Association President J. Michael Keeling in a statement. “As businesses become more aware of employee ownership’s advantages—which include higher corporate performance, a share in the rewards for employees, and a retirement plan that often outperforms other alternatives—it is easy to see employee ownership increasing.”

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Categories: Financial News

Investors Consider Fund Fees, Performance When Making Purchases - Wed, 08/15/2018 - 15:30

Mutual fund investors on the whole are very savvy about fees, according to a survey by the Investment Company Institute (ICI). Based on data collected in mid-2017, ICI says 90% of mutual fund-owning households consider the fees and expenses of a fund, with 40% indicating that this information is “very important.”

Additionally, 90% of mutual fund-owning households consider the historical performance of a fund, with 50% saying this information is “very important.” Seventy-eight percent consider a fund’s performance compared to an index, with 35% saying this is “very important.”

Furthermore, 90% consider the fund’s investment objective as well as the risk level of the fund’s investments. Thirty-six percent say that each of these measures is “very important.”

“Mutual fund-owning households review many factors when choosing mutual funds to help them achieve their investment objectives, such as the fund’s fees and expenses, the historical performance of the fund and the risk level of the fund’s investments,” says Sarah Holden, senior director of retirement and investor research at the ICI. “By carefully considering these aspects of a fund, they are able to make informed choices and save and invest to meet their future financial goals.”

ICI conducted the telephone survey of 5,000 households from May to July 2017.

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Categories: Financial News

School District Accused of Age Bias in Salary to Avoid Pension Contribution - Wed, 08/15/2018 - 15:26

Urbana School District No. 116 violated federal law prohibiting age discrimination when it limited the salary increases that older teachers had earned, pursuant to an unlawful provision of a collective bargaining agreement, the U.S. Equal Employment Opportunity Commission (EEOC) charged in a lawsuit.


The agency’s pre-suit investigation found that the Urbana School District limited the salary increases of Charles Koplinski and a group of other teachers older than 45 because of their age, due to a provision of a collective bargaining agreement between the school district and the union representing teachers, Urbana Education Association IEA-NEA. That provision limits the salary increases of teachers who are within ten years of retirement eligibility to no more than 6% above their previous year’s salary.


Julianne Bowman, the EEOC’s district director in Chicago, says that for school districts other than Chicago, the Illinois state pension code provides that if a teacher’s final average salary for purposes of calculating pension benefits includes a year in which the teacher received a salary increase of more than 6%, the school district must contribute to the Teacher’s Retirement System to cover the increased pension cost attributable to the salary increase greater than 6%. “Urbana cannot try to avoid making a contribution required by state law by limiting salaries of older teachers because of their age,” Bowman says.


Koplinski, age 52, had completed post-graduate classes that should have entitled to him to receive more than a 6% raise for the 2015-16 and 2016-17 school years. But because Koplinski’s age at the time put him within ten years of retirement eligibility, his raise was capped at 6% for both school years.


The Regional Attorney of the Chicago District Office, Gregory Gochanour, explains, “If Koplinski were age 40 instead of age 50 when he completed the post-graduate classes that would have entitled him to more than a 6% salary increase and he would have received his full raise. Instead, his raise was capped at 6%. Setting salaries based on age is age discrimination, plain and simple, and violates federal law.”


The EEOC filed suit in the U.S. District Court for the Central District of Illinois (Equal Employment Opportunity Commission v. Urbana School District No. 116 and Urbana Education Association, IEA-NEA; Civil Action No. 18-cv-2212-CSB-EIL) on August 10.

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Categories: Financial News

Crowded Private Debt Market Confounds Institutional Investors - Tue, 08/14/2018 - 16:57

Willis Towers Watson has published a new report, “Finding Value in Private Debt,” underscoring the challenges facing institutional asset owners when it comes to finding compelling opportunities in private debt.

According to the report, adoption of private debt has become more widespread among asset owners, with assets allocated to credit strategies more than tripling between 2007 and 2017. However, Willis Towers Watson researchers believe that investors are placing too much focus on mid-market corporate direct lending, “thereby missing out on opportunities in less competitive parts of the market that could offer greater return outcomes.”

“The private debt market has grown substantially in a relatively short space of time and continues to do so in an increasingly diverse manner,” explains Chris Redmond, global head of credit and diversifying strategies at Willis Towers Watson. “As the market widens, its complexities become more difficult to understand, with the majority of institutional investors continuing to concentrate their activities on mid-market corporate direct lending.”

The report suggests one main result is large capital flows into a squeezed portion of the market, creating downward pressure on returns and upward pressure on risk.

“With this portion of the market demonstrating signs of deterioration in future return potential, Willis Towers Watson believes that investors must make sure they continue to direct capital toward areas offering the best risk-adjusted returns,” the report warns. Adding to the issue, Willis Towers Watson finds there is “a tendency for managers to focus on ideas that can be quickly raised, are scalable and profitable to run—which ultimately results in them flocking toward very similar opportunities.”

Redmond points to better opportunities in smaller niche strategies, which are harder to scale and typically offered by specialist managers.

“These are often the most compelling, particularly when faced with higher valuations such as those we see in most credit markets today,” he explains. “Investors who are willing to pair with specialist lending teams in specific geographies and assets are ultimately going to derive the greatest benefit in the long term. Similarly, investors’ willing to embrace complexity and revisit asset classes tainted by prior poor performance are also likely to be well rewarded.”

One other challenge identified in the report is that many investors are unwilling to be a first mover into markets that have experienced historical performance issues.

“U.S. residential mortgages are a great example of this,” Redmond concludes. “It’s a sector that we believe has demonstrated improved fundamentals while delivering excellent performance, both on an absolute and risk-adjusted basis.”

The full report is available for download here.  

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Categories: Financial News

Half of Pre-Retirees Expect to Return to Work - Tue, 08/14/2018 - 15:39

Fifty-three percent of workers who expect to retire in the next five years think it is likely they will return to work, according to a survey by Home Instead, Inc.

Earning additional income was their primary reason for returning to work, cited by 67%, followed by fighting boredom (44%) and keeping their minds sharp (22%). Sixty-eight percent of those approaching retirement say they plan to work in a different industry, and 65% of retirees who have returned to work say the same.

“Today, more aging men and women are redefining what their next chapter looks like, seeking out new career opportunities that serve their skills, passions and life goals,” says Jeff Huber, president and CEO of Home Instead, Inc. “We are seeing the desire among seniors for a second career to not just fulfill a monetary need but source of personal fulfillment later in life. In fact, many of our professional caregivers are seniors themselves.”

Nearly 80% of those nearing retirement or who have retired and returned to work say they would like to make a meaningful impact in their communities in their post-retirement years, such as through volunteering, caregiving, teaching or giving back.

Catherine Collinson, CEO of the Transamerica Center for Retirement Studies, says that with people living longer, retiring at age 65 is an outdated hallmark.

“With Boomers blazing the way, full retirement is no longer a point in time,” Collinson says. “The transition could be a decade or more and involve shifting gears and working in a different capacity or finding a flexible arrangement, all with more time for family.”

Home Instead, Inc. says that some of the most popular jobs for retirees are retail sales clerks, bank tellers, online tutoring and caregiving.

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Categories: Financial News

401(k) Participants Mostly Stayed Put in Investments in July - Tue, 08/14/2018 - 14:19

July was a particularly slow month for trading in 401(k) plans, with no days of above-normal trading activity, according to the Alight Solutions 401(k) Index. This was the first month of no days of above-normal trading activity since June 2017 and continues the lull in trading, with only one day of above-normal trading in both May and June.

Thirteen of 21 days favored fixed income, and, on average, 0.014% of balances were traded each day. Throughout the entire month, participants transferred a total of 0.15% of their balances. Year-to-date, they have transferred a total of 0.80% of their balances.

The number of days when participants transferred money into fixed income funds in July totaled 13, or 62% of the trades. Year-to-date, they have transferred money into fixed income funds on 80 days, representing 55% of the trades. The number of days when participants transferred money into equity funds totaled eight, or 38% of the trades. Year-to-date, they have transferred money into equity funds 66 days, representing 45% of the trades.

Inflows went primarily into stable value (53%), mid U.S. equity (22%) and money market funds (15%), with money coming out of company stock (27%), target-date funds (26%) and emerging markets funds (14%).

At the end of July, participants had an average of 68.9% of their portfolios invested in equities, up slightly from 68.5% in June. New contributions in July matched those in June, with 68.1% invested in equities.

The three top asset classes with the largest percentage of total balances were target-date funds (28%), large U.S. equity funds (25%) and stable value funds (10%). Asset classes with the most contributions in July were target-date funds (46%), large U.S. equity funds (20%) and international funds (8%).

Domestic and international equities had positive market returns in July, with both large U.S. equities and small U.S. equities up 1.7%. International equities were up 2.3% and U.S. bonds were virtually unchanged, with a 0.1% gain.

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