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Vanguard fees fall to as low as two cents per $1,000

Posted on April 29, 2016 by Editorial Staff -

Vanguard has announced expense ratio reductions for several of its funds, including the world’s two largest bond funds and two largest stock funds, the Valley Forge-based direct marketer of mutual funds and ETFs said in a release this week.

The funds and their expense ratio reductions included:

Vanguard Total Bond Market Index Fund. The world’s largest bond fund, with $158 billion in assets, reduced its expense ratio for Investor Shares by four basis points, to 0.16%; for Admiral Shares, by one basis point, to 0.06%; for ETF Shares, by one basis point, to 0.06%; for Institutional Shares, by one basis point, to 0.05%; and for Institutional Plus Shares, by one basis point, to 0.04%.

Investor Shares have a $1,000 to $3,000 investment minimum, depending on the fund, Admiral Shares have an investment minimum of $10,000 to $100,000, depending on the fund, and Institutional Shares have a $5 million investment minimum.

Vanguard Total Bond Index II Fund. The world’s second-largest bond fund, with $96.3 billion in assets, reduced its expense ratio for Investor Shares by one basis point, to 0.09%. For Institutional Shares, the expense ratio fell by three basis points, to 0.02%.

Vanguard Total Stock Market Index Fund. The world’s largest stock fund, with $418 billion in assets, reduced its expense ratio for Investor Shares by one basis point, to 0.16%.

Vanguard 500 Index Fund. The industry’s oldest stock index fund and the world’s second-largest stock fund, with $227.5 billion in assets, reduced its expense ratio for Investor Shares by one basis point, to 0.16%.

Vanguard clients pay an average asset weighted expense ratio (the average shareholders actually pay) of 0.13%, which is five basis points below the firm’s average expense ratio of 0.18%, the Vanguard release said.

Other fee reductions

Seventeen Admiral Shares and fourteen ETF Shares also reported expense ratio reductions. Eighty-nine Vanguard funds, including 51 index funds and 38 actively managed funds, offer Admiral Shares. These shares represent combined assets of $1.2 trillion, or more than a third of Vanguard U.S. mutual fund assets.

Seventy of Vanguard’s index funds offer ETF shares, with combined assets of $506.7 billion. Three duration-specific bond ETFs saw their expense ratio drop one basis point, to 0.09%. These included:

The $18.6 billion Vanguard Short-Term Bond Index ETF (Ticker: BSV)
The $8.5 billion Vanguard Intermediate-Term Bond Index ETF (Ticker: BIV)
The $2 billion Vanguard Long-Term Bond Index ETF (Ticker: BLV).

Expense ratio reductions of one basis point (to 0.08%) were also reported for:

The $20 billion Vanguard Growth ETF (VUG)
The $19.8 billion Vanguard Value ETF (VTV)
The $13.6 billion Vanguard Mid-Cap Fund ETF (VO)
The $11.8 billion Vanguard Small Cap ETF (VB)

The expense ratio reductions span five fund share classes (Investor, Admiral, ETF, Institutional, and Institutional Plus) across five fund categories: Domestic stock index, domestic bond index, balanced index, managed payout, and tax-managed.

Vanguard investors saved $71 million as a result of lower expense ratios reported for 73 shares classes offered by a variety of Vanguard mutual funds, the firm said in its release. Vanguard said its clients saved about $215 million in fiscal 2015 on investments in shares of 200 funds.

In DC plans, managed accounts and TDFs suit different wealth tiers: Cerulli

Posted on April 29, 2016 by Editorial Staff -

Managed accounts in defined contribution (DC) plans should be seen as a complement to target-date funds, not as a replacement for them, according to the April 2016 issue of The Cerulli Edge-U.S. Monthly Product Trends Edition.

Highlights from this research:

Despite added customization features, a number of hurdles exist for managed accounts if they are going to effectively replace target-funds as a QDIA. They have a place in DC plans, but are more fitting as a complement to target-date funds. Managed accounts are an appropriate solution for older, wealthier investors who are solidifying their retirement plans.

The four largest managed account providers in the U.S., with about 95% of the market, include Financial Engines (60%; $113.4 billion), Morningstar (21%; $40.3 billion), Fidelity (8%; $14.5 billion) and Guided Choice (7%; $12.3 billion).

Whether actively or passively managed, target-date funds have a demonstrated track record of bringing multi-asset-class solutions to retirement plans, and investors have been overwhelmingly receptive. According to a Cerulli survey, 64% of asset managers rate being the primary manager of a target-date fund as a major opportunity.

Mutual fund flows increased in size during March, with the vehicle gathering $17.9 billion. Overall, 1Q 2016 flows totaled $16.2 billion. Flows, coupled with strong March equity returns, led to asset growth of 4.9% in March and 0.2% during the first quarter.

Bolstered by March’s equity market rebound, ETF assets shot up 7.3% during the month to finish at $2.16 trillion. Flows steadied after a disappointing start to the year, with the vehicle bringing in $30.6 billion during March.

Manager who helped launch three-insurer in-plan annuity rejoins AllianceBernstein

Posted on April 29, 2016 by Editorial Staff -

Jeff Eng has rejoined AllianceBernstein as managing director of custom defined contribution solutions, the global investment management firm announced this week.

He will be responsible for sales of AB’s existing custom target-date offerings and Lifetime Income Strategy solution, while “supporting the firm’s broader initiative in digital delivery of retirement planning advice.” Prior to rejoining the firm, Jeff was Director of Retirement Income Solutions at Russell Investments.

Eng originally joined AB in 2001 as a product director in defined contribution, where he helped develop and launch Lifetime Income Strategy, the first multi-insurer target-date fund with a guaranteed lifetime withdrawal benefit. The insurers on the platform include Prudential, Nationwide and Lincoln Financial.

When they reach a certain age, participants who own Alliance Bernstein target-date funds can start buying protection for their TDF savings in the form of a guaranteed lifetime withdrawal benefit (GLWB) rider from one of those three insurers, who share the business by bidding for it. The program has been in use at United Technologies for several years.

The rider guarantees a certain benefit base, a percentage of which (minus prior withdrawals) the investor can receive for life. If the clients outlive their own assets, they will still receive that same percentage of the guarantee amount each year until they die.

By involving three insurers rather than one, the plan sponsor avoids the risk of relying on a single issuer for its in-plan annuity. That risk has discouraged many plan sponsors from including any annuity option within their plans.

AB manages more than $46B in total defined contribution assets. The asset manager introduced a multi-manager target-date mutual fund series for the DC market in 2014, co-managed with Morningstar, and a multi-manager target-date series in a collective investment trust (CIT) format in 2015 partnering with Mercer Investments for third-party manager selection.

Those who work longer live longer, study shows

Posted on April 29, 2016 by Editorial Staff -

Working past age 65 could lead to longer life, while retiring early may be a risk factor for dying earlier, a new study from Oregon State University indicates.

Healthy adults who retired one year past age 65 had an 11% lower risk of death from all causes, even when taking into account demographic, lifestyle and health issues, the researchers found.

Even self-described “unhealthy” adults were likely to live longer if they kept working, the findings showed, which indicates that factors beyond physical health may affect post-retirement mortality.

“Work brings people a lot of economic and social benefits that could impact the length of their lives,” said Chenkai Wu, a doctoral student in epidemiology at the College of Public Health and Human Sciences.

The findings were published recently in the Journal of Epidemiology and Community Health. Besides Wu, the authors include Robert Stawski and Michelle Odden of OSU and Gwenith Fisher of Colorado State University. The research was supported by a grant from the National Institute on Aging.

Wu took an interest in the effects of retirement on health in part because of China’s mandatory retirement age laws, which are often debated. Retirement age is also an issue for debate elsewhere around the world, including the United States, he said.

“Most research in this area has focused on the economic impacts of delaying retirement. I thought it might be good to look at the health impacts,” Wu said. “People in the U.S. have more flexibility about when they retire compared to other countries, so it made sense to look at data from the U.S.”

Wu examined data collected from 1992 through 2010 through the Healthy Retirement Study, a long-term study of U.S. adults led by the University of Michigan and funded by the National Institute on Aging. Of the more than 12,000 initial participants in the study, Wu narrowed his focus to 2,956 people who began the study in 1992 and had retired by the end of the study period in 2010.

Poor health is one reason people retire early and also can lead to earlier death, so researchers wanted to find a way to mitigate a potential bias in that regard.

To do so, they divided the group into unhealthy retirees, or those who indicated that health was a factor in their decision to retire – and healthy retirees, who indicated health was not a factor. About two-thirds of the group fell into the healthy category, while a third were in the unhealthy category.

During the study period, about 12% of the healthy and 25.6% of the unhealthy retirees died. Healthy retirees who worked a year longer had an 11% lower risk of mortality, while unhealthy retirees who worked a year longer had a 9% lower mortality risk. Working a year longer had a positive impact on the study participants’ mortality rate regardless of their health status.

“The healthy group is generally more advantaged in terms of education, wealth, health behaviors and lifestyle, but taking all of those issues into account, the pattern still remained,” said Stawski, senior author of the paper. “The findings seem to indicate that people who remain active and engaged gain a benefit from that.”

The Reverse Mortgage Puzzle: Part III

Posted on April 21, 2016 by Kerry Pechter -

During lunch at a recent financial industry conference, an advisor was asked for his opinion of reverse mortgages. “I might recommend them to certain types of clients,” he said, chewing on his farm-raised salmon. “But don’t see how I could get paid for it.”

With rare exceptions, the nation’s hundreds of thousand of securities licensed investment advisors—a likely source of retirement advice for millions of Americans—don’t recommend Home Equity Conversion Mortgages, as reverse mortgage are formally called, nor do they typically consider them, even when circumstances might be appropriate.

There are understandable reasons for this avoidance. As a practical matter, advisors who don’t have mortgage licenses can’t make direct commissions from a HECM or earn a finder’s fee for a HECM referral. Second, most brokerage advisors don’t practice “life-cycle” investing, which considers an investors entire “household balance sheet,” including home equity. Third, FINRA, the self-regulator of broker-dealers, has long regarded them with suspicion.

The suspicion was well earned. Before 2009, the HECM market went through a Wild West phase. Some advisors steered people into reverse mortgages as a way to fund annuities. Some borrowers took out lump sum loans, squandered the money and skipped out on their taxes and insurance, leading to foreclosures. These episodes led to legislative outcry, regulatory alerts and changes to the HECM program that the public still hasn’t digested. The reputation of the reverse mortgage has yet to recover.

“There’s still a dark cloud over HECMs,” said Michael Banner, a long-time advocate of reverse mortgages who has a CE-accredited business devoted to teaching financial advisors about HECMs.

The upshot is that, in addition to post-financial-crisis reductions in the generosity of the HECM program and the retreat of large financial institutions from the HECM business—plus a mandatory, client-paid pre-sale counseling requirement—the HECM program is hobbled by lack of demand on the part of broker-dealers and advisors. Little wonder that it isn’t thriving.

‘Not even discussed’

Reverse mortgages aren’t investments, so it should not come as a great surprise that investment advisors don’t promote them. “In my 10+ years here, I’ve never heard reverse mortgages used in any way,” Scott Stolz, vice president at Raymond James, the national broker-dealer, told RIJ recently. “I haven’t even heard them discussed. We don’t compensate the advisors in any way for recommending them.”

“I am not aware of a prohibition on the use of reverse mortgages, but I am also not aware of a source of the product for the financial advisors,” he added. If a Raymond James advisor wanted to recommend a HECM, he would be inviting scrutiny regarding the use of the loan proceeds. “We prohibit the use of HECM funds for investment purposes,” Stolz said.

This sort of purposeful indifference to HECMs, of course, frustrates reverse mortgage advocates, who understand the gatekeeping role that financial advisors play in their clients’ choices. “We hear this every day,” said Shelly Giordano, principal at Longevity View Associates, a Washington, DC, HECM broker. “I am mystified that a planner would intentionally ignore a valuable asset just because he does not get paid to access it,” she added. If advisors make recommendations about Social Security claiming, Giordano believes, it makes equal sense for them to advise on the use of reverse mortgages.

Compliance officers at many financial advisory firms and brokerages still tell their advisory staffs to “steer clear” of HECMs, she has found. “It can be extremely frustrating for someone to go to an advisor to whom they’re paying a 1% fee, and say they want information about a reverse mortgage, only to hear the advisor say, ‘I can’t talk to you about that,’” Giordano, who is chairman of a HECM lenders group, Funding Longevity Task Force, and author of What’s the Deal with Reverse Mortgages (People Tested Media, 2015), told RIJ.

But advisors know that their own self-regulatory agency, FINRA, is wary of the product.

FINRA once characterized HECMs as a “last resort” strategy for retirees who exhaust all other sources of liquidity. In 2014, it acknowledged the reforms made to the HECM program by HUD and, after lobbying by the Funding Longevity Task Force, revised its position and recommended that home equity be “used prudently.”

Still, FINRA’s May 2014 Investor Alert on HECMs hardly endorses the product. Titled, “Reverse Mortgages: Avoiding a Reversal of Fortune,” its first paragraph says, “As more Americans near retirement age, some financial institutions are aggressively marketing reverse mortgages as an easy, cost-free way for retirees to finance lifestyles—or to pay for risky investments—that can jeopardize their financial futures.”

The alert points out that HECMs can be “quite expensive” and that the HECM loan will come due if the borrower needs to move into a nursing home. It reminds prospective borrowers that “reverse mortgages were originally designed as a tool for allowing aging, low-income homeowners to keep their homes by providing a source of additional monthly income to meet expenses.”

Much of this wariness is grounded in the Real Estate Settlement Procedures Act, which extends back to 1974 and whose enforcement is now under the Consumer Financial Protection Bureau. RESPA stops anyone without a mortgage license from getting paid in a mortgage transaction. To prevent financial advisors and others from getting finder’s fees for sending clients to mortgage brokers, RESPA specifically “outlaws kickbacks that increase the cost of settlement service.”

‘Type A brokers’

A certain number of planners do say, [reverse mortgages] are better than I thought, but then they ask, ‘How do I make money on this?’” said Michael Banner, founder of the AmericanCEInstitute, which teaches financial advisors about HECMs. “The only legal and ethical answer is: by becoming a licensed mortgage loan officer. No one can make money on any FHA loan, forward or reverse, unless they are properly licensed.”

“If an advisor wanted to get licensed, and licensed with FHA-approved correspondent, they can earn a fee. They would have to take part in the transaction and adhere to the cross-selling law,” he added.

But getting a license may not be as easy as taking an exam. If a certified financial planner (CFP) who is also securities licensed wanted to get a mortgage license, Banner said, he or she might have to get their broker-dealer’s permissions first. And that permission may not be forthcoming.

“The majority of broker-dealers are still against their reps being able to do reverses. They’re afraid that a type-A investment advisor will convince grandma to take a reverse mortgage loan and put the money into the stock market. FINRA knows that many of its 430,000 registered reps want to be the next Gordon Gekko, and it’s afraid that it can’t regulate all of them. Fear of the ‘bad eggs’ stops them from taking the risks that might help the masses.”

Banner is talking about brokers’ inclination to “cross-sell”—that is, to use reverse mortgages simply as a way to fund a product, such as long-term care insurance or a variable annuity, that will pay the broker a large commission. That practice inspired the so-called McCaskill amendment to the Restoring American Financial Stability Act of 2010, which specifically outlawed cross-selling. The sponsor was Senator Claire McCaskill of Missouri.

A fee-only perspective

Of course, that was several years ago, when the wounds of the financial crisis were still fresh. Changes in the design of HECMs and new regulatory safeguards, such as counseling requirements, are beginning to bring reverse mortgages in from the cold. They appeal to “life-cycle” planners, who prescribe different strategies for different stages in a person’s life, rather than treating the entire lifespan as a wealth-gathering period.

One fee-only life-cycle planner, Paula Hogan, CFP, of Milwaukee-based Hogan Financial, is open to reverse mortgages. In a blogpost last fall titled, “Reverse Mortgages: Yes! Worth a fresh look,” she wrote, “Thanks to some recent and welcome regulatory changes and the continuing low interest rate environment, reverse mortgages are now another tool” in the financial planning tool kit.

In a recent email, Hogan described some of the precautions that people over 62 should take when considering a reverse mortgage. She noted for instance, that paying upfront settlement costs out of pocket rather than financing them might be wise in some cases, that clients should be prepared for a long and detailed administrative process, that some people prefer to be debt-free in retirement, and that “with aging and dementia research, it’s clear that simplicity for finances in old age has appeal.”

But Hogan, a thought-leader in the fee-only advisor world, believes that some of the new uses for reverse mortgages are valid. “No longer relegated to late-night TV ads, reverse mortgage are becoming mainstream,” her post said. “The traditional use of a reverse mortgage, providing cash when all other retirement wealth has been depleted, is no longer the go-to option. Instead, reverse mortgages are now being used for a range of other planning purposes. We anticipate that many of our clients will want to put a reverse mortgage in place.”

Next Week: Repositioning HECMs for a comeback.

The Case Against Helicopter Money

Posted on April 21, 2016 by Michael Heise -

Despite years of expansionary monetary policy, the European Central Bank has failed to push inflation back up to its target of “below but close to 2%.” The latest measures—a zero interest rate on the ECB’s main refinancing operations, an increase in monthly asset purchases from €60 billion ($67 billion) to €80 billion, and an even lower deposit rate of -0.40%–are unlikely to change this. That is why some economists are urging the ECB to go even further, with so-called “helicopter drops” – that is, financing private consumption by printing money.

The idea of helicopter money dates back to the monetarism debates of the 1960s. A central bank, it was argued, never runs out of options for stimulating aggregate demand and stoking inflation, provided it is willing to resort to radical measures. But what was once a theoretical notion now seems to be a concrete possibility.

In practice, helicopter drops would arrive in the form of lump-sum payments to households or consumption vouchers for everybody, funded exclusively by central banks. Governments or commercial banks distributing the money would be credited with a deposit or be given cash, but no claim would be created on the left-hand side of the central bank’s balance sheet.

This type of single accounting would reduce the central bank’s equity capital, unless it realized (sold) valuation reserves on its balance sheet. Proponents defend this approach by claiming that central banks are subject to special accounting rules that could be adjusted as needed.

The proponents of helicopter drops today include some eminent figures, including former US Federal Reserve Chair Ben Bernanke and Adair Turner, former head of the United Kingdom’s Financial Services Authority. And while ECB President Mario Draghi has highlighted the technical, legal, and accounting obstacles that stand in the way of helicopter drops by his institution, he has not ruled them out.

The question now is: Is such an extreme step really justified?

The answer is no. While helicopter drops are a viable policy option if deflation is spiraling downward, as it was in the late 1920s and early 1930s, that is not the case today—neither in the eurozone nor in the global economy.

True, demand growth is subdued, reflecting the lingering fallout from the global financial crisis that erupted in 2008. Banks, firms, and households are still cleaning up their balance sheets and working off the heaps of debt they amassed during the credit boom that preceded the bust. But they have already made significant progress, meaning that the drag on growth is set to diminish.

Consumers today are not holding back on spending because they expect goods and services to become cheaper, as one would expect during a period of deflation. Instead, they are gradually increasing their spending, taking advantage of restored income growth and large gains in purchasing power caused by collapsing oil and commodity prices. As a result, most advanced economies are once again producing at close to capacity.

Data on corporate profits also contradict the view that we are mired in deflation. Price stability has not put profit margins under pressure. On the contrary, in many advanced economies, profits are high—even reaching record levels—owing partly to lower input costs.

In this environment, distributing largesse financed by the central bank would have dangerous systemic consequences in the long run, because it would create perverse incentives for everyone involved. Policymakers would be tempted to resort to helicopter money whenever growth was not as strong as they would like, instead of implementing difficult structural reforms that address the underlying causes of weak economic performance.

All of this would raise expectations among financial-market actors that central banks and governments would always step in to smooth out credit bubbles and mitigate their consequences, even if that meant accumulating more debt. These actors’ risk perception would thus be distorted, and the role of risk premiums would be diminished.

Add to that the impact of the depletion of valuation reserves and the risk of negative equity—developments that could undermine the credibility of central banks and thus of currencies—and it seems clear that helicopter drops should, at least for now, remain firmly in the realm of academic debate.

We’re 10X Too Fearful of a Crash: Shiller

Posted on April 21, 2016 by Kerry Pechter -

Humans are notorious for exaggerating the risk of catastrophic but rare events. A well-known Nobel Prize-winning economist calculates that, on average, investors worry about big stock market crashes about 10 times more than their actual frequency would warrant. He blames the news media and evolutionary biology.

Since 1989, that economist, Robert Shiller of Yale, has overseen the distribution of regular surveys to 300 high net worth individuals and institutional investors chosen scientifically by a market survey firm.

Among other things, respondents are asked to estimate the probability that a 10% to 20% drop in equity prices will occur during the next six months. Shiller uses the responses to calculate his Stock Market Confidence Indices.

Shiller, who wrote the books “Irrational Exuberance” and “Animal Spirits,” about market mania, also used the data in a new working paper, “Crash Beliefs from Investor Surveys,” where he and co-authors William N. Goetzmann and Dasol Kim explore possible reasons why the stock market is always “climbing a wall of worry.”

At a six-month time horizon, the actual likelihood of an extreme crash like the one that ended the Roaring Twenties or that interrupted the cocaine- and junk bond-fueled 1980s, Shiller found, is only about 1.7%. That’s if you look at the trading days between October 23, 1929 and December 31, 1988. If you look at the entire history of the Dow Jones Industrial Average, the probability drops to about one percent. A far cry from the 10% to 20% estimates in the Shiller surveys.

“We find evidence that the average, subjective probability of an extreme, one-day crash on the scale of 1987 or 1929 [i.e. greater than 12.82%] to be an order of magnitude larger than would be implied by the historical frequency of such events in the U.S. market. Over the 1989-2015 period, the mean and median probability assessments of a one-day crash were 19% and 10%, respectively,” the paper says. (An “order of magnitude” is a factor of ten. Two orders of magnitude would be a factor of one hundred.)

Shiller, like other researchers before him, suspected the media might be to blame, because of the way it trumpets bad financial news and treats good financial news with relative indifference. So he searched for correlations between bad market news and his survey results.

It turned out that when the market had a bad day, the press tended to emphasize it, and the negative press was correlated with pessimism expressed in Shiller’s surveys among by individual investors. “We find evidence that investors use recent market performance to estimate probabilities about a crash,” the paper said. “We also find that the press makes negative market returns relatively more salient and this is associated with individual investor probability assessments of a crash.” Institutional investors, not surprisingly, the data showed, were less moved by the news that individual investors.

Consistent with the triage standard (“if-it-bleeds-it-leads”) in news placement, the researchers found that negative financial news was more likely than positive financial news to get front-page treatment. “It is also consistent with negative news being potentially more relevant to investors than positive news. There is considerable evidence that negative news garners more attention and reflection,” the researchers wrote.

From the perspective of evolutionary biology, that made sense. Danger demands immediate attention. “Both animals and humans are conditioned to give stronger weight to negative things, experiences and events. Negative experiences engage greater cognitive effort, have greater influence in evaluations, are more likely to be taken as valid, increase arousal, and enhance the memory and comprehension of the event,” the paper said.

The researchers believed that their results had important implications for investors. Normal market volatility, coupled with the media’s tendency to catastrophize, might discourage people from investing in equities and hurting their returns, drive up the demand for insurance against market downturns, and help raise the “equity premium”—the higher average annual returns that equities have historically offered relative to bonds. Without expectations of that higher return, investors would have no reason to take the risks associated with investing in stocks.

It’s a slightly ironic finding, especially if you consider that one of the supposed lessons of the 2008 financial crisis was that risk tails are “fatter,” and so-called black swan events much more common, than our historically-driven economic models are able to predict.

Integrity Life enhances popular Indextra indexed annuity

Posted on April 21, 2016 by Editorial Staff -

Integrity Life Insurance Co. has enhanced Indextra, a single-premium fixed indexed annuity, according to W&S Financial Group Distributors, Inc., wholesale distributor of annuities and life insurance from companies in Western & Southern Financial Group.

Indextra owners can now use one- and two-year point-to-point allocation options associated with the Goldman Sachs’ GS Momentum Builder Multi-Asset Class (GSMAC) Index. Indextra continues to offer a three-year point-to-point allocation option with the GSMAC Index.

In a release, Mark E. Caner, president of W&S Financial Group Distributors, said that the enhancements came after “consistent requests for additional interest crediting periods” associated with the Goldman Sachs designed index. “Financial representatives now can offer their clients shorter terms that credit interest, as well as ladder multiple terms of varying lengths.”

The GSMAC Index uses a volatility-control design that “aims to minimize swings in the index and smooth returns in both falling and rising markets,” the release said. There is no interest rate cap or interest spread fee on the GSMAC index because none is necessary—a performance “governor” is built into the index and limits the issuer’s liability under the contract.

Caner said that about 80% of the premium flow into Indextra goes to the Goldman index options. Launched Sept. 29, 2014, Indextra has garnered sales to date of more than $800 million, making it the most successful first-year product debut in W&S Financial Group Distributors history.

Envestnet and partners add automated retirement solutions

Posted on April 21, 2016 by Editorial Staff -

Responding to the new Department of Labor conflict-of-interest regulations, Vertical Management Systems Inc., Envestnet | Retirement Solutions, and United Retirement Plan Consultants, have created a platform where financial advisors, retirement plan sponsors and participants can integrate fiduciary, recordkeeping and compliance services.

VMS’s Retirement Revolution platform offers multiple services, including plan design and set-up, full recordkeeping and administration, and fiduciary protection that addresses the new DOL rules, the companies said in a release.

VMS offers three solutions: “Retirement Revolution,” a retirement platform with full fee transparency, open architecture, and participant-level recordkeeping; “Mutual Fund Desk,” a mutual fund process-and-control platform that offers automation and control over mutual fund processing; and “Specialized Information Services,” a source of audited mutual fund data customized to minimize processing errors and accelerate the posting of income.

Envestnet, Inc. (NYSE: ENV) provides unified wealth management technology and services to investment advisors. Envestnet | Retirement Solutions (ERS), a unit of Envestnet, Inc. provides retirement advisors with practice management technology, research and due diligence, data aggregation, compliance tools and managed accounts.

Envestnet | Yodlee is a cloud-based data aggregation and data analytics platform for digital financial services. More than 950 companies, including 12 of the 20 largest U.S. banks and hundreds of Internet services companies, subscribe to the Envestnet | Yodlee platform to power financial apps and services.

Morningstar and Redtail expand partnership

Posted on April 21, 2016 by Editorial Staff -

Morningstar Office, the portfolio and practice management system for financial advisors, is adding Redtail Technology’s customer relationship management capabilities, Morningstar Inc. reported this week.

With the integration, advisors will be able to transfer data between firms to reduce redundant entry and provide up-to-date client and account data within the Redtail CRM interface. Morningstar Office also offers account aggregation, back-office services, and rebalancing capabilities.

The integration expands the relationship between the two firms. In 2014, Morningstar’s proprietary research and analytics were added to the Redtail CRM user interface.

Morningstar Office includes portfolio management and performance reporting, advanced research functionality, investment planning, and secure client communication. Redtail CRM solutions include automated workflows, an “intuitive user interface,” and paperless office and email archiving.

Americans still overestimate safe retirement spending rate: NY Life

Posted on April 21, 2016 by Editorial Staff -

Americans still lack awareness when it comes to ways to avoid running out of money in retirement, according to a 10-year comparison survey conducted by Ipsos Public Affairs and sponsored by New York Life.

The 2016 survey, released this week, shows that 77% of Americans over age 40 do not know how much of their retirement savings they can spend each year without running the risk of outliving their assets. In 2006, 90% of Americans did not know a safe withdrawal rate.

More than half of Americans over the age of 40 (58%) surveyed overestimated the safe withdrawal rate, which is widely believed to be four percent per year for the typical retiree, and 19% admit they do not know how much to withdraw without running out of money in retirement.

At greatest risk are the 31% of respondents who believe they can spend 10% or more of their savings each year. At that rate, based on historic investment returns, retirees risk running out of money in about 11 years or less, said a New York Life release.

The Reverse Mortgage Puzzle, Part II

Posted on April 15, 2016 by Dave Lindorff and Kerry Pechter -

Of the factors that help popularize a financial product, energetic distribution may be the most important. And that energy comes from a combination of robust wholesaling, the presence of a trusted brand-name manufacturer, positive media coverage, and (not least) competitive incentives for the sales force.

Little wonder then that Home Equity Reverse Mortgages (HECMs for short) aren’t getting much traction. The HECM market has none of those must-have ingredients. Yes, it’s got government backstopping, positive academic research, a hypothetically deep market and a plausible story line. But those elements aren’t enough.

This week, we offer the second installment of a series on why the HECM industry is stalled just when it should be growing. Last week we focused on the HECM product, and how it became less generous after the financial crisis. This week we examine the role of the banks—large ones and smaller ones—and their roles (or former roles) in the distribution of HECMs.

The mega-banks ramped up their reverse mortgages businesses before the financial crisis, through internal growth or acquisition, and then abandoned HECMs after the crisis, when alleged mishandling of foreclosures attracted regulatory scrutiny and bad publicity. Sales today are still well below the 2007 peaks, but decision-makers at niche mortgage companies and regional banks told us they see signs of recovery.

Big banks enter and exit HECMs

The reverse mortgage business would certainly be healthier if America’s biggest financial institutions, with their thousands of sales reps and (in the case of banks) ubiquitous branches, were still promoting and selling them, but they stopped doing that four or five years ago.

Wells Fargo, Bank of America, and then-MetLife Bank were, prior to their departure, mainstays of the reverse mortgage business. Wells Fargo had entered the reverse mortgage business in 1990—only two years after Ronald Reagan created them (and, some say, the germ of the 2008 crisis) by signing the Housing and Community Development Act of 1987.

When HECMs got hot in 2007—sales jumped 41% that year—Bank of America bought the $4 billion reverse mortgage portfolio of Reverse Mortgage of America from Seattle Mortgage. The next year, MetLife purchased EverBank Reverse Mortgage in April 2008 and folded it into MetLife Bank. At the time, American Banker predicted that by 2028 one in five new mortgages in the US would be a HECM.

But then the financial crisis hit. Latent risks in the reverse mortgage business, along with those of mortgages generally, quickly became apparent. Too many people who had taken lump sum HECMs and blown the money were not paying the required taxes or insurance, creating a looming foreclosure crisis for which the government was ultimately on the hook.

By mid-2009, the Office of the Comptroller of the Currency was investigating HECMs and in 2011, the OCC slapped MetLife Bank, Wells Fargo, Bank of America and five other financial giants with charges of “unsafe and unsound practices related to residential mortgage loan servicing and foreclosure processing.”

Suddenly, HECMs—a relatively miniscule business for the big banks—became more trouble than they were worth. Bank of America and Wells Fargo got out in 2011. MetLife followed in 2012, selling its HECM servicing business to Nationstar and its $7.5 billion in bank deposits to General Electric. MetLife didn’t want the regulatory hassles that went with being a bank holding company. Major reforms of the HECM program (see Part I of this series) soon followed. Amid the turmoil, HECM sales slumped to a seven-year low.

Second-wave HECM sellers

The mega-banks’ departure from the HECM business left it to niche firms like American Advisors Group, All Financial Services, and Senior Reverse Mortgage, which lacked national brand recognition. Some of these firms later ran afoul of the new Consumer Financial Products Bureau (CFPB), which regulates HECM lenders. The Bureau found their ads misleading or their recordkeeping on customer payments deficient.

Often turning to late-night TV and hiring pitchmen like the late actor and Senator Fred Thompson or Henry (“the Fonz”) Winkler to hawk the product, some lending firms have been accused of improperly referred to their HECM loans as “government programs” or “government insured,” implying that the borrower was insured against loss, when in fact the lender is. In February 2015, the CFPB charged three lenders with “misleading consumers.”

“You have to worry about a product that private companies are resorting to advertising on late-night TV,” said Deborah Lucas of MIT, author of research on HECMs. “It’s true that reverse mortgages have gotten a bad reputation,” conceded Peter Bell, CEO of the National Reverse Mortgage Lenders Association (NRMLA).

One of those private companies—the one who hired Sen. Thompson as a pitchman, in fact—is Orange, Calif.-based American Advisors Group, or AAG. According to Reverse Mortgage Insight, AAG originated a total of 14,569 reverse mortgages in 2015, or 25.8% of the HECM market. The second-largest player, Finance America Reverse Mortgage, originated 7,344 reverse mortgages last year.

AAG uses a lead generation model to market its reverse mortgages, according to its CEO, 37-year-old Reza Jahangiri. Reps at three phone banks take calls from people who respond to its TV, Internet and print ads and forward the leads to licensed brokers. The brokers typically work from homes and earn a salary plus commission.

“Many of them worked for the reverse mortgage units of MetLife, Wells Fargo and Bank of America,” Jahangiri (at right) told RIJ. “We also have loan officers in the field who develop their own leads, building relationships with advisors, insurance agents and others.” AAG also buys closed loans from other lenders or accepts client referrals. “But retail is the biggest part of our business,” he said.

A private company, and not a deposit-taking institution, AAG originates the loans, collects upfront application and closing fees, and funds loans from its own equity or with financing from banks like UBS. AAG sells the closed loans to the Government National Mortgage Association (“Ginnie Mae”), which securitizes them. With the proceeds of those sales, AAG discharges its bank loans.

AAG does about 12% of its business with low-income people whom it requires to agree to set-asides of funds from their HECM to ensure payment of taxes and insurance premiums, and to make needed repairs. Another one to two percent of the HECMs go to those wealthier homeowners who want to open a HECM-LOC (line-of-credit) and let its capacity grow untapped. It’s a percentage he expects will grow.

Most of its clients fall between those two extremes. “About 50% of our customers,” he says, “are people with average sized homes who have urgent expenditures—such a medical issue. They open a HECM-LOC, draw perhaps $20,000 to meet those expenses, and then keep the rest available for emergencies and peace of mind.” The remaining clients have homes worth $230,000 or more and have existing mortgage debt. “They pay off that debt, eliminating a monthly income drain, and then have the credit line left over to use as needed.”

A regional banker hosts a radio show

Regional banks are also helping to fill the HECM distribution vacuum left by the mega-banks. One of them is Pittsburgh-based Dollar Bank, a $7.2 billion federal savings bank serving southwestern Pennsylvania and northeastern Ohio. “I love this product,” said Randy Davis, assistant vice president for residential lending at Pittsburgh-based Dollar Bank, in a phone interview.

Randy Davis Davis (at left), who is salaried, said he has closed 281 reverse mortgages over the past three years, including 176 in the city of Pittsburgh. Another loan officer handles all the reverse mortgages in Cleveland, where the bank also operates. Half of their HECM applicants are Dollar Bank customers. The rest come through promotional efforts by the bank, including advertising and a monthly radio program that Davis hosts.

He has seen the HECM borrower profile evolve, especially since the 2013 reforms in the program. “A reverse mortgage used to be a product for single retirees struggling to get by,” Davis told RIJ. “Now I see it used by people who want to get rid of a mortgage. When a reverse mortgage eliminates an $800 or $1000 monthly bill, that can be a life-changer.” Financial advisors are beginning to refer wealthier people, “who see [HECMs] as a good investment strategy.” Dollar Bank does not charge an origination fee on HECM loans, he added.

The process of taking a customer through the process of obtaining a reverse mortgage is more time consuming than in a forward mortgage. “It can take two or three days of meetings to explain these things,” he said.

“But I don’t mind that. My biggest obstacle is still the stories about people being ousted from their homes. Those stories were true, but foreclosure can’t happen if both spouses sign the loan, if you do a financial assessment, and as long as the tax payments, insurance payments and needed repairs are made.”

While Dollar Bank is the only bank now offering HECMs in the Pittsburgh and Cleveland markets, Davis expects—and welcomes—competition. “All community banks will eventually offer this to their customers,” he predicted. “That would bring the costs down, the way it has with home equity lines of credit. I don’t know how long it will take, but eventually reverse mortgages will be as common as home equity loans.”

Preaching HECMs at a Virginia church

Not every story is quite as rosy. At another regional bank, a mortgage broker who also handles reverse mortgages has seen signs of renewed demand for HECMs. “We have a lot of people come in and ask about reverse mortgages. Some see the ads on late night TV and don’t trust them, so they come to see us,” said the broker, who asked not to be identified because he was speaking without his employer’s permission.

“Others see the printed materials that we’ve started putting out in the branches about our reverse mortgages. As a loan officer, I also look for opportunities to educate people. Four or five libraries let me present programs on the product. One of our branches in Virginia set up a session in a church that was attended by several hundred people,” he told RIJ.

“Under the new rules, we have to do a financial assessment of new applicants. We look for a good credit history–a record of paying their bills on time–and an income stream that will allow them to pay their taxes and homeowner’s insurance and to maintain the home. We’ve had to arrange a set-aside out of the loan proceeds to cover those costs for only one applicant so far. The set-aside was based on life expectancy of the borrower, which was 10 years.”

Difficulties remain. “Reverse mortgages remain a small segment of our business, I think, because of misconceptions about the product—that the bank ends up with the deed to the property, or that the heirs will be stuck with the debt.” The flow might be larger, he said, if financial advisors in the bank’s investment program sent clients to the loan department to look into reverse mortgages. But they don’t. “We have a job to do educating our financial planners, because they don’t have that mindset.”

NEXT WEEK: Why Few Advisors Recommend HECMs.

What’s Wrong with Negative Rates

Posted on April 15, 2016 by Joseph E. Stiglitz -

I wrote at the beginning of January that economic conditions this year were set to be as weak as in 2015, which was the worst year since the global financial crisis erupted in 2008. And, as has happened repeatedly over the last decade, a few months into the year, others’ more optimistic forecasts are being revised downward.

The underlying problem – which has plagued the global economy since the crisis, but has worsened slightly – is lack of global aggregate demand. Now, in response, the European Central Bank (ECB) has stepped up its stimulus, joining the Bank of Japan and a couple of other central banks in showing that the “zero lower bound” – the inability of interest rates to become negative – is a boundary only in the imagination of conventional economists.

And yet, in none of the economies attempting the unorthodox experiment of negative interest rates has there been a return to growth and full employment. In some cases, the outcome has been unexpected: Some lending rates have actually increased.

It should have been apparent that most central banks’ pre-crisis models – both the formal models and the mental models that guide policymakers’ thinking – were badly wrong. None predicted the crisis; and in very few of these economies has a semblance of full employment been restored. The ECB famously raised interest rates twice in 2011, just as the euro crisis was worsening and unemployment was increasing to double-digit levels, bringing deflation ever closer.

They continued to use the old discredited models, perhaps slightly modified. In these models, the interest rate is the key policy tool, to be dialed up and down to ensure good economic performance. If a positive interest rate doesn’t suffice, then a negative interest rate should do the trick.

It hasn’t. In many economies – including Europe and the United States – real (inflation-adjusted) interest rates have been negative, sometimes as much as -2%. And yet, as real interest rates have fallen, business investment has stagnated. According to the OECD, the percentage of GDP invested in a category that is mostly plant and equipment has fallen in both Europe and the US in recent years. (In the US, it fell from 8.4% in 2000 to 6.8% in 2014; in the EU, it fell from 7.5% to 5.7% over the same period.) Other data provide a similar picture.

Clearly, the idea that large corporations precisely calculate the interest rate at which they are willing to undertake investment – and that they would be willing to undertake a large number of projects if only interest rates were lowered by another 25 basis points – is absurd. More realistically, large corporations are sitting on hundreds of billions of dollars – indeed, trillions if aggregated across the advanced economies – because they already have too much capacity. Why build more simply because the interest rate has moved down a little? The small and medium-size enterprises (SMEs) that are willing to borrow couldn’t get access to credit before the ECB went negative, and they can’t now.

Simply put, most firms – and especially SMEs – can’t borrow easily at the T-bill rate. They don’t borrow on capital markets. They borrow from banks. And there is a large difference (spread) between the interest rates the banks set and the T-bill rate. Moreover, banks ration. They may refuse to lend to some firms. In other cases, they demand collateral (often real estate).

It may come as a shock to non-economists, but banks play no role in the standard economic model that monetary policymakers have used for the last couple of decades. Of course, if there were no banks, there would be no central banks, either; but cognitive dissonance has seldom shaken central bankers’ confidence in their models.

The fact is that the eurozone’s structure and the ECB’s policies have ensured that banks in the underperforming countries, and especially in the crisis countries, are very weak. Deposits have left, and the austerity policies demanded by Germany are prolonging the aggregate-demand shortfall and sustaining high unemployment. In these circumstances, lending is risky, and banks have neither the appetite nor ability to lend, particularly to SMEs (which typically generate the highest number of jobs).

A decrease in the real interest rate – that on government bonds – to -3% or even -4% will make little or no difference. Negative interest rates hurt banks’ balance sheets, with the “wealth effect” on banks overwhelming the small increase in incentives to lend. Unless policymakers are careful, lending rates could increase and credit availability decline.

There are three further problems. First, low interest rates encourage firms to invest in more capital-intensive technologies, resulting in demand for labor falling in the longer term, even as unemployment declines in the short term. Second, older people who depend on interest income, hurt further, cut their consumption more deeply than those who benefit – rich owners of equity – increase theirs, undermining aggregate demand today. Third, the perhaps irrational but widely documented search for yield implies that many investors will shift their portfolios toward riskier assets, exposing the economy to greater financial instability.

What central banks should be doing is focusing on the flow of credit, which means restoring and maintaining local banks’ ability and willingness to lend to SMEs. Instead, throughout the world, central banks have focused on the systemically significant banks, the financial institutions whose excessive risk taking and abusive practices caused the 2008 crisis. But a large number of small banks in the aggregate are systemically significant – especially if one is concerned about restoring investment, employment, and growth.

The big lesson from all of this is captured by the familiar adage, “garbage in, garbage out.” If central banks continue to use the wrong models, they will continue to do the wrong thing.

Of course, even in the best of circumstances, monetary policy’s ability to restore a slumping economy to full employment may be limited. But relying on the wrong model prevents central bankers from contributing what they can – and may even make a bad situation worse.

An Overview of the Fiduciary Rule

Posted on April 15, 2016 by Fred Reish -

The DOL’s fiduciary rule has been published in the Federal Register. Based on our review of the regulation and conversations with our clients, here are some overview thoughts about the regulation and the two “distribution” exemptions (84-24 and BICE).

The Fiduciary Definition

The rule is much as expected. The definition of fiduciary advice continues to be very broad, capturing almost all common sales practices for investments and insurance products. It includes investment recommendations to plans, participants and IRA owners, as well as recommendations about distributions from plans and transfers and withdrawals of IRAs. All of those will be fiduciary activities.

As a result, those recommendations will be subject to the fiduciary standard when made to plans or participants, and subject to the Best Interest standard of care when made to IRA owners (if the adviser needs the prohibited transaction relief provided in BICE or 84-24).

Much of the conversation has been about the requirements of the exemptions. Because of that, we are concerned that the impact of the fiduciary and Best Interest standards of care has not been adequately considered. In our opinion, those standards of care will be more impactful than generally thought.

In both cases (that is, the prudent man rule and the Best Interest standard), the adviser’s recommendations will be measured by what a hypothetical prudent and knowledgeable investor would do. In other words, it is the standard of a hypothetical knowledgeable person, and not the standard of the actual adviser or the investor.
What were the most notable changes in the final regulation from the proposal?

The “applicability” date for the regulation was deferred until April 10, 2017. Most people thought that compliance would be required on January 1, 2017, so that gives the financial services sector an additional three months to comply with most of the requirements. (See the additional extension of time for certain BICE requirements below.)

Advisers will continue to be able to provide participant education for retirement plans, using asset allocation models (AAMs) that include specific designated investment alternatives. (“Designated investment alternatives” are those investments that are selected by the plan fiduciaries for participant direction in 401(k) or 403(b) plans. As a result, they must be prudently selected and monitored by the plan fiduciaries.)

However, populated asset allocation models are not permitted as a part of investment education for IRA owners. In that case, AAMs that include the names of investments would be fiduciary investment advice.

Platform providers (that is, recordkeepers) will be allowed to provide additional assistance, within limits, to respond to requests for proposals and similar inquiries from plan sponsors.

When an adviser becomes a fiduciary, the adviser’s conduct is also governed by the fiduciary prohibited transaction rules in ERISA and the Internal Revenue Code. Generally speaking, those rules prohibit advisers (or their affiliates) from receiving payments from third parties (such as 12b-1 fees or insurance commissions) and from making investment recommendations that affect the levels of their compensation. Those transactions are literally prohibited.

However, the DOL has issued prohibited transaction exemptions which, if their requirements are satisfied, would allow the receipt of those types of payments. There are two exemptions that could apply to fiduciary advisers to mid-sized plans, participants, and IRAs. Those are 84-24 and BICE, which are discussed below.

Prohibited Transaction Exemption (PTE) 84-24

The current version of 84-24 covers the sale of all insurance products by fiduciary advisers. The proposed amendment to the exemption would have continued to cover those sales to plans and IRAs, but would have transferred the sale of individual variable annuity contracts from the 84-24 exemption to BICE.

That was a significant change, because 84-24 is generally viewed as less burdensome than BICE. As a result, many in the insurance industry urged the Department of Labor to return individual variable annuities to 84-24 when the final rules were issued.

But, that didn’t happen. In fact, sales of other types of insurance were moved from 84-24 to BICE. Before getting into that, though, let’s look at the most important requirements of 84-24. Those are:

The adviser must acknowledge in writing that he is a fiduciary and must agree to adhere to the best interest standard of care. (As a practical matter, the best interest standard of care is a combination of ERISA’s prudent man rule and ERISA’s duty of loyalty. In other words, those concepts are being extended from ERISA to IRAs.)
Think about the consequences of that. For example, the recommendation of a particular insurance company must be prudent and the recommendation of the particular insurance contract must also be prudent.
The adviser’s compensation must be no more than reasonable and the adviser cannot receive any additional financial incentives, for example, trips, awards, or bonuses.
The adviser’s statements cannot be materially misleading. The failure to describe a material conflict of interest is deemed to be misleading.
The adviser must disclose his compensation.

The 84-24 exemption also limits the commissions that can be paid to advisers to “reasonable” amounts. As a result, we believe that advisers who recommend or sell insurance and annuity contracts should obtain benchmarking information about similar sales and the commissions that are reasonable under those circumstances.

Before the sale is made, those disclosures must be delivered to the plan fiduciary or IRA owner in writing, and the fiduciary or IRA owner must acknowledge the disclosures and approve of the transaction in writing.

What are the most important changes in the final 84-24 exemption?

The types of insurance products covered by 84-24 were further limited. That is because group variable annuity contracts and fixed indexed annuities were transferred from 84-24 to BICE. As a result, 84-24 now covers only fixed rate annuities and insurance policies.

The compensation payable to advisers was expanded from just commissions to include accruals of health benefits and retirement benefits, but other payments and benefits are prohibited.

The applicability date will be April 10, 2017. Many people thought that it would be January 1, 2017, so that allows another three months to develop compliant procedures and practices.

Best Interest Contract Exemption (BICE)

The most significant changes were made to the Best Interest Contract Exemption. The changes were so great that it is not possible to describe them in this short article. So, we will just mention a few. (But, we will be doing a separate article on BICE in the coming weeks.)

BICE provides an exemption for prohibited transactions resulting from recommendations of any investment or insurance products to plans or IRAs. (In that sense, it provides an alternative exemption for the insurance products within the scope of 84-24.)
Generally speaking, it requires a contract or similar writing that is signed by a financial institution and that is given to the investor. (The financial institution is the bank, insurance company, broker-dealer or RIA, who oversees the adviser.)

The financial institution contractually agrees that it and the adviser will serve as fiduciaries and will adhere to the best interest standard of care. The financial institutional also must agree to disclose material conflicts of interest and represent that none of its statements are misleading. In addition, a host of other disclosures must be made.
What are the most noteworthy changes in the final BICE?

The final version of BICE requires a contract that is signed by the financial institution and an IRA owner. However, for plans, the financial institution can deliver a written disclosure, but it is not required that the plan fiduciaries sign a contract with the financial institution.

The contract and disclosures do not have to be delivered or signed at the time of the first conversation. Instead, that requirement can now be satisfied at point of sale.

The proposal had demanded disclosure requirements at point of sale and annually thereafter. Those disclosures were liberalized and can now be made with information that is more general, but which has to be clearly and conspicuously provided to the plans or IRA owners. The investor has the right to obtain detailed information on request.

The proposal had a website requirement that was difficult, and perhaps impossible, to satisfy. The final has a less burdensome website disclosure requirement.

The final version of BICE has simplified compliance procedures for level fee advisers who are (i) capturing distributions and rollovers from plans, (ii) recommending withdrawals or transfers of IRAs, or (iii) recommending transfers from commission-based accounts to fee-based accounts.

As finalized, BICE has provided greater relief for investment accounts that are already in existence at the time of the applicability date of the new rules. For example, an adviser can now make a hold recommendation without becoming subject to the prohibited transaction rules.

The applicability date has largely been deferred to January 1, 2018. However, some of the requirements become applicable on April 10, 2017. Those include, for example, the best interest standard of care and reasonable compensation limitation.

BICE requires that the compensation paid to the adviser, the financial institution, and affiliates be no more than reasonable. We believe that financial institutions (such as broker-dealers and insurance companies) will need to develop or obtain benchmarking information in order to evaluate the reasonableness of the compensation of their advisers. In due course, we suspect that benchmarking services will develop for sales to IRAs, much as they have already developed for advice to plans.

While the proposal excluded some assets (e.g., illiquid investments) from its relief, the final BICE is available for all types of investments.

Conclusion
The final rules will require structural changes for some financial services companies. For example, we believe that broker-dealers will be affected the most. Insurance companies will also need to make changes. At the other end of the spectrum, most RIAs will only need to make changes to adjust to the new rules regarding recommendations of distributions and rollovers from plans and withdrawals and transfers of IRAs.

Recordkeepers fall in between those two groups. Recordkeepers who have insurance companies or mutual fund manager affiliates will be impacted more than independent recordkeepers.

While not directly affected by the new rules, mutual fund management firms need to understand their impact, for example, the needs of broker-dealers in this new environment. Some broker-dealers may decide to shift many of their accounts to level fee advisory accounts. In that case, they may not be able to receive 12b-1 fees or other payments. Instead, they will likely want share classes that are specifically designed for advisory accounts. Those share classes could resemble a retail version of institutional shares.

At this point, though, it is impossible to know all of the repercussions. Stay tuned.

Symetra’s new indexed annuity offers rising lifetime payout rates

Posted on April 15, 2016 by Editorial Staff -

Symetra Life Insurance Company has introduced Symetra Income Edge, a single premium fixed indexed annuity with a lifetime withdrawal benefit rider that offers growth potential during the accumulation and distribution periods.

Here are links to an Income Edge product fact sheet and a product brochure.

Instead of offering a “roll up” or increase in a notional “benefit base” each year, Income Edge increases the contract owner’s maximum withdrawal rate by half a percent (0.50%) in each of the first ten contract years. There is a 9% penalty for surrender in the first year, declining to zero penalty after eight contract years (excluding withdrawals up to 10% of the account value or withdrawals under the living benefit.

Contract owners can take level withdrawals or index-linked withdrawals. For each age band, the level or guaranteed minimum payout rate for the level withdrawal option is 1.25% higher than the payout rate for the index-linked withdrawal option. The contract is available as single life or joint life.

For instance, if a single person age 60 to 64 invested $100,000 in the contract, under the level option he or she would be eligible for a 4.5% withdrawal in the first year, 7% after five years and 9.5% after 10 years. The minimum payout rate under the indexed option for the same person would be 3.25% in the first year, 5.75% after five years and 8.25% after 10 years, but there would be an opportunity for growth through exposure to equity indices.

“As the contract value grows, the future maximum withdrawal amount also increases—even after 10 years. Under the indexed option, potential contract value growth is based on the accounts selected—S&P 500 Point-to-Point; JPM ETF Efficiente 5 Point-to-Point; Fixed Account,” Symetra said in a release. Under the level option, the account grows by a guaranteed minimum interest rate.

Advisors must distinguish themselves from robots: Cerulli

Posted on April 15, 2016 by Editorial Staff -

Success in any business, it is often said, requires establishing a well-defined value proposition. This truism is especially important for financial advisors as they face competition from (and pressure to adopt some of the techniques of) automated or semi-automated advisory services.

“Defining and communicating a value proposition may be increasingly important as conversations about low-cost digital advice offerings gain awareness among mainstream investors,” said Kenton Shirk, associate director at Cerulli, in a release. “As the ‘robo’ threat stirs conversations about the cost of advice, it is more important than ever for advisors to articulate their value.”

“Advisors who take the time to define their practice’s value proposition often feel more confidence and conviction when communicating that message,” Shirk added. “This confidence, in turn, injects more passion and enthusiasm into conversations with prospects, making the message more compelling.”

These findings and others can be found in the 2Q 2016 issue of The Cerulli Edge – Advisor Edition, which examines business development and the value of strategic alliances and advisor events.

Cerulli surveyed advisors and found that they believe a “warm and personal image” is one of the biggest reasons prospects and clients choose to work with them. It was the second most common reason (out of 15 reasons), after “financial planning approach.”

“High-touch service” was the fifth most common reason.

Only 11% of advisors overall (6% of independent advisors and 14% of employee advisors) said that clients work with them because of “low cost.” That suggests that advisors don’t believe that the low-cost advantage enjoyed by robo-advisors will have a big impact on whether clients choose to work with them.

Nonetheless, the Cerulli report said, “As the ‘robo’ threat stirs conversations about the cost of advice, it is more important than ever for advisors to articulate their value.”

As for competition between advisors and robo-advice, Cerulli’s data showed that their markets overlap in some areas but not in others. Among advisors who said they practice “niche marketing,” the most common target niches were “business owners” and “women.” If “women” in this case primarily refers to “widows,” the data doesn’t suggest much direct competition between human and robo advisors.

On the contrary, segments of the mass-affluent or upper-middle class—engineers, professors, tech professionals, government employees and teachers—are rarely targeted by either independent or broker-dealer advisors.

Double-digit revenue declines at Sun Life and Manulife: A.M. Best

Posted on April 15, 2016 by Editorial Staff -

Stock prices for publicly traded U.S. life and annuity (L/A) insurers rebounded slightly in fourth-quarter 2015 with a 2% increase following a marginal decline in the previous quarter, according to a new A.M. Best special report focused on the stock price performance of nearly two dozen L/A companies.

The Best Special Report, titled, “Macroeconomic Factors Continue to Pressure Publicly Traded Life/Annuity Insurers,” states that despite the favorable aggregate stock price performance in fourth-quarter 2015, the 23 L/A insurers followed in this report still posted an overall 3% decline for the year.

With just nine of the companies reporting higher revenues in 2015, the decline largely stemmed from two Canadian companies, Manulife Financial and Sun Life Financial, which saw revenue declines of 38.2% and 25.2%, respectively. National Western Life (-16.8%) and Fidelity Guaranty Life (-13.9%) also reported double-digit percentage declines.

Macro-economic factors are driving the weakness in the L/A segment, although the effects have been partially offset by company-specific moves, including mergers and acquisitions. The Federal Reserve (Fed), as reported in December 2015, expects economic activity to expand moderately, labor market indicators to strengthen and inflation to remain below its 2% target in 2016.

The Fed increased the Federal Funds Target Rate by 25 basis points in December 2015 for the first time in almost 10 years and indicated that any future rate increases would be gradual and data-dependent.

Revenue for the L/A population in this report declined year over year by 8.5% in 2015.

Although most L/A companies in early 2016 have faced many of the same challenges they faced in early 2015, owners, shareholders and policyholders must ensure that companies are not adding new risks. The economy pressures not only investment portfolio returns, but also the profitability of many products, both spread-based and those with underlying long-term interest rate assumptions.

Capital markets are likely in the early stages of a reversal of the long benign credit environment and the L/A industry is poised to absorb what could be a sudden drop in credit quality and liquidity of even its stronger investment grade holdings, A.M. Best believes.

Although the industry has a buy-and-hold philosophy, the financial crisis of 2007-2008 showed the importance of liquidity for insurers. Pressure is already being felt in the corporate bond market through the exposure to energy-related business, which has hurt Manulife and Sun Life.

To access a copy of the report, please visit .

Vanguard again leads monthly active and passive inflows: Morningstar

Posted on April 15, 2016 by Editorial Staff -

Estimates of U.S. mutual fund and exchange-traded fund (ETF) asset flows for March 2016 were reported by Morningstar Inc. this week. Taxable-bond funds had their highest monthly intake, $31.9 billion, since January 2013, when they collected $32.6 billion.

Highlights from Morningstar’s report about U.S. asset flows in March:

Fixed-income flows began favoring passive strategies in 2013 and have become more volatile since then, when the Federal Reserve announced its decision to begin tapering off its asset purchases. The passive share of fixed-income assets increased from 19% in 2013 to 27% as of the end of March.

Intermediate-term bond, high-yield bond, and corporate bond were the top asset-gathering fixed-income categories in March for the second consecutive month.

Vanguard once again led active and passive flows at the provider level in March, and its $28.9 billion net inflow for the month was higher than inflows for the other nine largest fund companies by assets under management combined. With the exception of American Funds and BlackRock, all other active fund providers sustained outflows.

Manager changes were responsible for investor redemptions from the two active funds with the greatest monthly outflows: Ivy Asset Strategy, which has a Morningstar Analyst Rating of Neutral, and Virtus Emerging Markets Opportunities, which has a Bronze Analyst Rating, had outflows of $1.5 billion and $1.2 billion, respectively.

Morningstar estimates net flow for mutual funds by computing the change in assets not explained by the performance of the fund and net flow for ETFs by computing the change in shares outstanding.

To view the complete report, please visit .

Honorable Mention

Posted on April 15, 2016 by Editorial Staff -

How to find missing retirement funds: Millennium Trust

Millennium Trust Company, a leading provider of automatic rollover solutions for employer-sponsored retirement plans, today announced the launch of a free search tool to help individuals find unclaimed retirement funds that may have been rolled over to a Millennium Trust IRA account from a previous employer.

U.S. workers had nearly $25 trillion invested for retirement by the end of 2014 according to the “2015 Investment Company Fact Book,” but frequent job changes or layoffs may have caused some employees to lose track of their retirement accounts.

According to Terry Dunne, Managing Director of the Rollover Solutions Group at Millennium Trust, “Department of Labor statistics reveal that at the end of 2013, about 16 million people still had retirement assets in a former employer’s retirement plan. A significant percentage of these assets may represent missing, non-responsive participant assets.”

Millennium Trust is dedicated to assisting individuals to reconnect with their forgotten and unclaimed retirement accounts.

While there are several national databases that match individuals to unclaimed retirement funds, accounts custodied by Millennium Trust are not included. In response, the company has created an easy-to-use online search tool that will help anyone in the country see if they have unclaimed retirement account funds at Millennium Trust.

The process is simple: Visit http://www.mtrustcompany.com/unclaimed-retirement-funds. Enter your social security number—complete privacy is assured—and the system returns immediate results. If individuals have any unclaimed retirement funds, they can choose to complete online forms to either keep their account with Millennium Trust or take a distribution. Often former employees have moved or changed their contact information, making it difficult for previous employers or others to contact them. By providing current contact information, Millennium Trust can help the individual take control of their retirement funds.

Trump should take a stand on Social Security: AARP

Donald Trump is the only presidential candidate who has not laid out a plan to make Social Security financially sound – and 88% of New York’s undecided Republican voters 50 and older think he should, according to an AARP poll of the state’s largest voting bloc.

The survey of 399 Republican and 401 Democratic voters age 50 and above, conducted for AARP by Precision Opinion, found Trump and Hillary Clinton with commanding leads approaching next Tuesday’s New York presidential primaries, but with huge numbers of voters undecided.

On the GOP side, businessman Trump was favored by 40% of respondents, with 12% supporting U.S. Senator Ted Cruz of Texas, 9% backing Ohio Governor John Kasich, and 36% undecided.

Among Democrats, former First Lady and Secretary of State Clinton had 48%, with U.S. Senator Bernie Sanders of Vermont at 21%, and 26% undecided.

The 50+ group accounted for 57% of all New York votes in the 2012 presidential election despite making up less than 52% of the state’s voting-age population. Nearly 65% of New Yorkers 50 and older went to the polls in the last presidential election, well above the 52% rate among younger voting-age New Yorkers.

Nearly 3.5 million New Yorkers receive Social Security – including almost nine of every 10 New Yorkers 65 and older. The 80-year-old federal earned benefits program keeps a third of New York’s 65+ population out of poverty, and makes up 50% or more of the income of nearly half the state’s 65+ population – and 90% or more of the income for more than two of every 10 New Yorkers 65 or older.

Republican women were more likely than GOP men to say it’s “very important” that Trump lay out a plan for Social Security (57% vs. 46%), as were Republican voters earning under$50,000 a year compared to those making over $100,000 (65% vs. 44%). Republican men were far more likely than GOP women to say it was “not important at all” for Trump to issue a plan (16% vs. 6%).

The telephone poll of registered voters was conducted April 5-8. Each sample – 401 Democrats and 399 Republicans – has a margin of sampling error of plus or minus 5%.

Voting rates and percentages for New York’s 50+ are based on statistics found athttps://www.census.gov/hhes/www/socdemo/voting/publications/p20/2012/tables.html, Table 4C.

Book by American College CEO gets nod from Buffett

A book co-authored by Dr. Robert Johnson, President and CEO of The American College of Financial Services, is on a list of specially chosen books to be sold at Warren Buffett’s Berkshire Hathaway Annual Shareholders Meeting later this month.

The book, “Strategic Value Investing: Practical Techniques of Leading Value Investors,” is one of about three dozen books – mostly about Buffett or investing – to make the exclusive list. But unlike most that made the final cut, Dr. Johnson’s book was apparently handpicked by the iconic billionaire investor himself.

“I am truly humbled and honored to have the book selected for inclusion on the Berkshire Hathaway Annual Selections List,” said Dr. Johnson, who co-wrote the book with Stephen Horan and Thomas Robinson.

Dubbed the “Woodstock for Capitalists,” the meeting is scheduled for April 30 in Buffett’s hometown of Omaha, Neb. Approximately 40,000 shareholders from around the world are expected to be on hand to hear Buffett and his business partner, Charlie Munger, offer their insights on the company and investing.

The process of selecting the books that will be on display in front of such a large and sophisticated financial audience starts every year with the staff at an Omaha bookstore called The Bookworm. The staff compiles a list that includes books that have sold well at previous meetings, plus any relevant new books that they recommend. Buffett then approves the list and sometimes, if so inspired, adds his own selections.

Dr. Johnson, who was an undergraduate student at the University of Nebraska-Omaha and a student and professor at Creighton University – also located in Omaha – will be back in familiar territory during the event to sign copies of his book that details how to build a world-class portfolio using value investing.

“It is always great to make the pilgrimage back to my hometown of Omaha for the Berkshire Hathaway Annual Meeting,” he said. “Knowing that some Berkshire Hathaway shareholders — perhaps the most knowledgeable shareholder base in the country — will read the book is a dream come true. It outlines various measures of value and provides a guide for helping investors develop their own unique style.”

Dr. Johnson has written or co-written other books, including “Invest With the Fed,” “The Tools and Techniques of Investment Planning,” and “Investment Banking for Dummies.”

Living on a fixed income is scary: Allianz Life

Nearly half of Americans (47%) report being either “very concerned” (36%) or “terrified” (11%) that the rising cost of living will affect their retirement plans, according to a new study on Americans’ perceptions of the effects of inflation from Allianz Life Insurance Company of North America (Allianz Life). Additionally, 47% of respondents note they are either “very worried” (36%) or “panicked” (11%) that they won’t be able to afford the lifestyle they want in retirement due to rising costs.

Furthermore, 53% of Americans report they would feel either “very worried” (38%) or “panicked” (15%) about paying for expenses if their income was frozen and they never received an increase in annual salary. This concern is even greater among households with lower earnings—less than $50,000 per year—with 65% noting they are either “very worried” (41%) or “panicked” (22%) about the potential of having no annual pay raise on a fixed income. Unfortunately, many Americans already understand the challenge of living on a fixed income as only 50% of respondents reported they received annual pay raises during working years, and almost a third said they do “less than half of the time” (17%) or “almost never” (15%).

“This study highlights the potential psychological and fiscal impact of inflation on a person’s financial strategy,” said Allianz Life Vice President of Consumer Insights Katie Libbe.

According to Libbe, it’s clear from the data that consumers are aware of inflation and concerned about its effects on their retirement plans. Yet, these concerns are often overestimated. The average inflation rate Americans experienced over the last 20 years was 2.24%. However, more than a third (34%) of respondents believe the cost of living will rise 3%-4% per year during their retirement. Moreover, 19% expect to see an annual increase of 5%-6%, and almost one in 10 (8%) feel there could be an increase of more than 10% each year during their retirement.

These negative perceptions about inflation affect the way people are planning for their future, including basic needs such as housing, food and medical care. Nearly one-third (28%) worry they won’t be able to pay for the essentials because of the rising cost of living. This number jumps to 41% for those whose household income was less than $50,000. The study revealed that the majority (57%) of respondents plan to address rising costs by living more modestly in retirement.

Teamsters demonstrate against pension cuts

Thousands of Teamster retirees from across the country joined together at a rally at the U.S. Capitol today to protest the proposed cuts to their pensions by the Central States, Southeast and Southwest Areas Pension Fund (CSPF). The retirees received pledges of support from more than a dozen members of Congress in their fight to protect their hard-earned pension benefits.

CSPF filed an application for cuts to the Treasury Department in September 2015 as allowed under the Kline-Miller Multiemployer Pension Reform Act of 2014 (MPRA). Treasury appointee Ken Feinberg has until May 7 to approve or reject the application for benefit reductions. The cuts will devastate the lives of thousands of retirees who worked for years to earn pensions that could be cut as much as 60 percent under the CSPF plan.

“These cuts must not be approved,” said Teamsters General President Jim Hoffa. “You worked hard every day, year after year for the promise of a secure retirement. That was the deal. Now Central States wants to slash your pensions by up to 60 percent? Not on my watch. We will use every resource available to our union to stop these cuts!”

Members of Congress turned out to throw support behind the retirees’ fight against the cuts. In February, a bipartisan collection of 90 House members signed onto a letter sent to the Treasury asking it to reject Central States’ application. And 25 senators, both Republicans and Democrats, did the same in a separate letter.

“For years, workers have paid into the Central States pension plan,” Sen. Al Franken (D-Minn.) said. “Now, those promises are being broken. And it’s not right. I believe those that work hard and are promised retirement security should be able to retire with dignity.”

Surprise: DOL Rule Targets Indexed Annuities

Posted on April 7, 2016 by Kerry Pechter -

Advisors and agents who sell fixed indexed annuities (FIAs) to retirement account owners on a commission basis will have to pledge to act in the “best interest” of the purchaser under the final version of the Department of Labor’s fiduciary rule and its prohibited transaction exemptions, which the DOL released yesterday.

Specifically, FIA sellers will be bound by the terms of the new Best Interest Contract Exemption, or BICE. The BICE requires sellers to do what’s best for the client “without regard” to their or their companies financial interests. It affects transactions entered on or after April 10, 2017.

The DOL gave no direct warning that a BIC requirement for FIA sales would be included in the final rule; it wasn’t in the proposal. “I am floored,” said Sheryl Moore, an FIA industry data provider and consultant. But Cathy Weatherford, CEO of the Insured Retirement Institute, said she was prepared for such a possibility.

“We’re not surprised that Fixed Indexed Annuities were taken out of PTE 84-24, which advisors have used for the past 30 years to make annuities available to their clients. We have been advising our members that this was a possibility, based on our discussions with the DOL and the Administration,” she said in an email to RIJ yesterday.

Moore said she knows of several variable annuity insurers, including mutual companies that have never sold FIAs, who have taken steps recently to develop indexed annuity products on the assumption—now dashed—that FIAs would have a regulatory advantage over VAs under the final DOL rule.

Just a few days before the release of the final version of the BIC, Fitch Ratings released a report saying that the BIC could “negatively affect sales of variable annuities into qualified plans and could positively affect sales of fixed annuities and fixed indexed annuities (FIA).”

“Of course it is significant,” said Steve Saxon of Groom Law Firm in Washington, D.C. in an email. “Lots of folks thought that they could rely on PTE 84-24 for relief and avoid the BIC exemption. This will require a reevaluation of the exemption strategy. It depends, at least in part, on whether compliance with the BIC exemption works.”

Indeed, the language of the BICE itself contains concessions to the industry that could make it acceptable to the annuity industry. While the exclusive “without regard” to the financial interest of the seller language still stands (page 23), an advisor or agent doesn’t have to push the contract at the client at their first meeting.

Based on an initial reading of page 24, it now appears that he or she can establish rapport, and then at the point of transaction simply include among lots of other documents a blanket BIC document in which the financial institution, not the individual advisor or agent, pledges that its representatives will act in the client’s best interest. Clients will still have recourse to participate in class action suits against the institution for potential violations of the BIC.

Sales of indexed annuities in 2015 were $54.7 billion, according to IRI. While gross variable annuity sales were much higher, at $130.4 billion, the VA industry suffered net outflows in the third and fourth quarters. One source in the FIA industry suggested to RIJ that variable annuity issuers “lobbied” the DOL to level the playing field between FIAs and VAs by applying the BIC to both—a plausibly paranoid idea. About 56% of all fixed annuity premia in 2015 was tax-deferred money.

The language of the BIC is still too fresh to say exactly how its terms, which were softened in the final version, will affect sales of either product. Shares of American Equity Life, a leading publicly-held issuer of indexed annuities, lost $2.48 yesterday, or 15.34% of their value, according to Bloomberg.

The DOL likened FIAs to variable annuities in their cost and complexity. “Given the risks and complexities of these investments, the Department has determined that indexed annuities are appropriately subject to the same protective conditions of the Best Interest Contract Exemption that apply to variable annuities,” the final BICE text said.

FIAs have gotten even more complex in recent years, especially with the introduction of hard-to-value “hybrid” indices that allow issuers to offer supposedly “uncapped” gains even though the gains of FIAs are by design strictly limited. But it’s not clear if this trend influenced the DOL.

In the previous version of the rule, FIA sellers appeared to be spared from the BIC. The April 2015 version of the so-called fiduciary rule had allowed fixed indexed annuities, along with fixed deferred and fixed immediate or deferred income contracts, to be sold under so-called Prohibited Transaction Exemption 84-24, and not under the BIC.

But the new version changes that. It distinguishes FIAs from other fixed annuities. In doing so, it potentially conflicts with the July 2010 US District Court of Appeals ruling that FIAs are not akin to variable annuities, not securities, and not subject to regulation under SEC proposed regulation 151A.

“Fixed rate annuity contracts do not include variable annuities or indexed annuities or similar annuities. As a result, investment advice fiduciaries will generally rely on this Best Interest Contract Exemption for compensation received for the recommendation of variable annuities, indexed annuities, similar annuities, and any other annuities that do not satisfy the definition of fixed rate annuity contracts.”

In the final version of the BIC, the DOL said it considered an annuity a fixed annuity under PTE 84-24 only if it offered benefits that “do not vary, in part or in whole, based on the investment experience of a separate account or accounts maintained by the insurer or the investment experience of an index or investment model” (emphasis added).

By amending the propels to put FIAs under the BICE, the DOL has, without specific warning, introduced a potential new barrier to sales of what is, at present, the most successful annuity product. It may be one of the few parts of the final rule that became more aggressive than the most recent proposal.

“I was told repeatedly by the annuity companies that they did not believe this would happen because the DOL never gave them an opportunity to comment on this possibility,” a broker-dealer executive told RIJ. Others who met with the DOL shortly before the end of the comment period noted that the DOL representatives didn’t include FIAs when they referred to fixed annuities during the meeting and its absence was striking to them.

An FIA trade group felt the final rule made “no sense.” “We are disappointed by the decision of the DOL to treat Fixed Indexed Annuities (FIAs) differently than every other fixed annuity product,” Jim Poolman, executive director of the Indexed Annuity Leadership Council, told RIJ in an email. “Despite countless meetings, three comment letters, and public testimony before DOL, the final rule mischaracterizes FIAs and imposes rules that make no sense. At first blush, it appears that this rule discriminates among similar insurance products without any rational basis.”

The DOL said that it put FIAs under BICE because they’re so complicated and hard to understand. “Retirement Investors are acutely dependent on sound advice that is untainted by the conflicts of interest posed by Advisers’ incentives to secure the annuity purchase, which can be quite substantial.

“Both categories of annuities, variable and indexed annuities, are susceptible to abuse, and Retirement Investors would equally benefit in both cases from the protections of this exemption, including the conditions that clearly establish the enforceable standards of fiduciary conduct and fair dealing as applicable to Advisers and Financial Institutions.”

In addition, the DOL said that it wanted to create a “level playing field” for FIAs and VAs, and to avoid “a regulatory incentive to preferentially recommend indexed annuities,” as the original proposal could have created. But, arguably, the DOL has chosen to provide a disincentive to recommend VAs and FIAs, and gives an implied encouragement to the sale of fixed deferred and fixed income annuities, including single premium immediate annuities, deferred income annuities, and qualified longevity annuity contracts.

“The placement of fixed indexed annuities into the BICE could cause some product redesign,’ said Jamie Hopkins, co-director of the New York Life Center for Retirement at The American College. “The good news for annuity providers is that indexed and variable annuities did get a specific exemption from the prohibited transaction rules as long as the BIC and other requirements are met” and that “a little bit of the administrative burdens and complexities regarding the ‘best interest contract’ were removed from the proposed rule in the final rule.”

In the past, VA and FIA marketers have held that the public has voted with its pocketbook in favor of their products, which have enjoyed much higher sales than simpler annuities because they offer lifetime income guarantees with more flexibility and liquidity than conventional income annuities, which offer higher monthly payouts but are generally irrevocable and illiquid.

Critics of VAs and FIAs have argued that those products enjoy higher sales mainly because of the richer sales incentives (in the form of higher commissions and other incentives) that manufacturers, broker-dealers and insurance marketing organizations offer agents and brokers, and because clients don’t fully understand how much they must pay in fees for the benefits they receive.

How to find missing retirement funds: Millennium Trust

Trump should take a stand on Social Security: AARP

Book by American College CEO gets nod from Buffett

Living on a fixed income is scary: Allianz Life

Teamsters demonstrate against pension cuts

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