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The Bucket

Posted on July 15, 2015 by Editorial Staff -

MassMutual’s PlanALYTICS program boosts DC contributions

As of year-end 2014, 45% of retirement plan savers weren’t saving enough to maintain their lifestyles in retirement, according to an analysis of 401(k)s and other retirement plans served by MassMutual. But plan improvements like automatic enrollment would produce more retirement-ready savers, the analysis showed.

The data for the analysis was generated by MassMutual’s PlanALYTICSprogram, launched in 2013, which MassMutual uses to measure the relative effectiveness of retirement plans and the retirement-readiness of participants.

The analysis is based on a benchmark of replacing at least 75% of pre-retirement income at 67, the age most people qualify for full Social Security benefits. The benchmark takes into account retirement savings, Social Security and pension income, if any.

A book that reports on the theory behind the approach will be available to plan sponsors and financial advisors to encourage improved outcomes for retirement plans and their participants. The book is also available to the public at massmutual.com/planalytics.

Among sponsors enrolled in PlanALYTICS, those that offered both automatic enrollment and automatic deferral increases reported that the percentage of income contributed by participants to their retirement plan was twice as high as sponsors that did not offer those automatic features. The average participant account balance for plans with automatic features was 61.4 percent higher than those without automatic features.

Prudential Retirement retains $9.1bn public pension client

The North Carolina Retirement Systems, a retirement plan for public employees in North Carolina, has recommitted its NC 457 and NC 401(k) plans totaling $9.1 billion in assets to Prudential Retirement, a unit of Prudential Financial, Inc.

The North Carolina Retirement Systems has 52,637 participants in its NC 457 plan with more than $1.1 billion in assets as of March 31. Its NC 401(k) plan has 249,314 participants with more than $8 billion in assets. The plans serve more than 1,100 state and local government employers in North Carolina. Prudential Retirement became the plan’s recordkeeper in 2003.

The Request for Proposal was awarded to Prudential Retirement on March 19. The current contract will expire in December 2015, with the new contract becoming effective in January 2016. Mercer Investments will continue to serve as the advisor to the plans.

Prudential Retirement has $365.3 billion in retirement account values as of March 31, 2015. Prudential Financial, Inc., had more than $1 trillion of global assets under management as of March 31, 2015.

To economize, pensions of Dutch financial firms may merge

Several financial companies in the Netherlands are discussing the possibility of combining their pension funds into a “general pension fund,” or APF, for the financial sector, IPE.com reported.

The four pensions cover employees of custodian KAS Bank, pay firm Equens, the now-shuttered GE Artesia Bank and Van Lanschot Bankiers. The Dutch pension fund of Royal Bank of Scotland previously showed an interest in joining an APF.

If created, the new general pension fund would have about 10,000 participants and more than €2bn in assets. There would have a single independent board, but the assets would not be commingled.

All of the funds are looking to cut costs by achieving economies of scale that they currently lack. Something similar has been tried before. In 2012, several companies tried unsuccessfully to establish Pecunia, an industry-wide pension fund for the financial sector.

The €615m pension fund of Equens told IPE.com that its falling number of participants and rising costs per participant are driving its interest in a general pension fund. “The APF is the only right option for the future,” said Equens chairman Ben Haasdijk, adding that it would be cheaper than hiring a commercial pension provider.

Tamis Stuker, board member of the €288m KAS pension fund, said all participating companies could have an “individual ring” within the APF, providing economies of scale without totally giving up independence.

A trustee of the pension fund of GE Artesia Bank, a division of US-based General Electric that ceased operations in 2013, confirmed that her fund was participating in the working groups, but was still undecided.

The Dutch pension fund of Royal Bank of Scotland previously showed an interest in the APF and recently announced that it was also weighing its options for the future.

British official becomes BlackRock’s U.K. retirement strategist

BlackRock, the $5 trillion asset management firm, has hired Rupert Harrison, the British official who was “the brains behind” the UK’s decision to drop mandatory annuitization of tax-deferred savings.

Harrison, 36, will be “chief macro-strategist for funds investing in equities, bonds and cash,” IPE.com reported. “Given his experience shaping the recent pensions reforms in the UK, he is uniquely placed to help develop our retirement proposition,” BlackRock said in a release.

The deal was approved by the Advisory Committee on Business Appointments, which monitors such hirings, on the basis that Harrison doesn’t lobby the British government for two years.

Harrison’s move prompted criticism from John Mann, a Labour MP, who said the “revolving doors” move was “completely inappropriate. It is far too soon. It is the kind of behavior that gives politics a bad reputation.”

At ‘Spirit on Lake,’ Gay Retirees Find Community

Posted on July 9, 2015 by Sheila Eldred -

Minneapolis, MN—Lucretia Kirby, 60, was celebrating Minnesota’s same-sex marriage amendment in 2013 at the state Capitol when she met the woman who helped her find the place she calls home.

Now, thanks to that chance meeting with LGBT activist Barbara Satin, Kirby lives in a one-bedroom apartment at Spirit on Lake, a 46-unit affordable housing complex marketed to the older gay, lesbian, bisexual and transgender community.

Kirby’s rainbow flag flies from her window, which faces the city’s renowned Lake Street. Of the 46 units in the building, 19 are rented to LGBT residents. Five units are reserved for previously homeless seniors living with HIV/AIDS.

Many of the other residents are Somali, a reflection of the neighborhood in which Spirit on Lake resides. But the tinted windows that form a rainbow along the building’s exterior indicate that it’s a gay-friendly place, one of the first of its kind in the United States.

For a generation of openly gay people now reaching retirement age, it’s a welcome development. Many face isolation and economic woes because of alienation from family and because laws were rarely in their favor during their lifetime.

“Fifteen years ago, this place would not exist,” Kirby says. “We’re the pioneers. We will be models to the future gay people as they retire. As we become more tolerant of one another in this country, we’re going to have very diverse ways of retiring, and this is one of them.”

For Kirby, a former nun and Catholic school teacher, the move was critical for her financial and emotional health. She doesn’t receive a pension from her time in the convent, and her partner died in 2010 after a bad fall on the ice. Because the two could not legally marry in Minnesota at the time, Kirby was left without death benefits and forced to live on half of what she had been used to.

Kirby’s economic status is typical of many LGBT singles her age: Lesbian seniors are twice as likely to be poor as heterosexual married couples, according to a 2009 study by The Williams Institute. Many stayed single and closeted, afraid of being alienated by family or losing a job.

Now semi-retired, Kirby says she “gets by” working part-time for a local United Church of Christ for retreats and spiritual direction, grateful that she can afford her $718-a-month rent. Because it contributes to both her financial and personal well-being, she plans on working for as long as she can.

LGBT residents at Spirit on Lake understand both the emotional and financial impact isolation from family brings. “The glue that holds us together is that we all know what isolation is and what it feels like to be disconnected,” she says. “Here, we’re not disconnected. That’s what keeps people here.”

Estranged from both her own family and her former partner’s family because of their sexual orientation, Kirby faced the grief of her partner’s death alone. The family of her partner still refuses to tell Kirby where they buried her ashes.

In lieu of family support, members of the community at Spirit on Lake look after each other and have formed a kind of familial bond. At the end of the month, word will go out if people don’t have enough money to make ends meet.

“I’ll go to a food shelf and get groceries and give them to people who need them,” says Kirby, who has a car. “Or if I have extra, we kind of pool resources. Word will go out that so-and-so needs silverware or sheets. No one will go hungry here. The bottom line in here is hey, we’re human, we’ll take care of each other.”

In her apartment, Kirby’s dog, cat and fish keep her company. The quilt she made for her former partner hangs on the wall. It’s clearly home, and it’s helped her come to peace with who she is.

“It’s OK to be a senior lesbian single,” she says. “Senior lesbian single — that used to be a swear word. Spirit on Lake is a beautiful place to come to, especially at my age. I’m going to stay here as long as I can.”

For B-Ds, Independence May Prove Confining

Posted on July 9, 2015 by David Macchia -

One of my enduring regrets is not challenging the head of an independent broker-dealer several years ago when he told me that “Retirement income is nothing new for financial advisors. They’ve been doing it for many years.”

From my hands-on experience in the then-emerging retirement income business I knew he was wrong. But I was reluctant to challenge the gentlemen. A mistake. I regret it. I believed then—and continue to believe—that independent broker-dealers (IBDs) will be severely challenged by the retirement income opportunity. Ironically, IBDs’ core strength, not a weakness, will cause them to stumble. More on that later. First, some background.

As early as 2004, it was clear that the advice industry had moved into a quite new and different era. My firm would hear frequently from our advisor-customers about their successes at consolidating retirees’ assets.

They confirmed our thesis about investors’ willingness to switch the management of their retirement assets to a new advisor: Once a retiring investor’s concerns shift from accumulation toward the provision of stable, monthly income, it becomes relatively easy for almost any accumulation-focused advisory relationship—no matter how long-standing and successful—to be upended by a new advisor who appears in the role of income planning expert.

In 2005, when the Retirement Income Industry Association was formed, I first heard the term, asset consolidation. Executives from the member companies talked about the urgency to unite their corporate silos with new “cross-silo” retirement income businesses. Many of them began to understand the link between income planning expertise and asset consolidation.

But, ten years later, many people still don’t understand this. Most independent financial advisors are not yet experts at income planning. Therefore, their business relationships with their current clients are vulnerable. There’s a lot at stake here because, as I like to say, retirement income is a zero-sum game. It will create winners and losers in the extreme.

If you’d like to hear an advisor describe a real-world example of asset consolidation through income planning, download this excerpt from my interview with advisor John Geenan. John’s experience illustrates how, even under conditions highly favorable to the incumbent advisor, the new advisor with income planning skills can capture the retirement assets.

So, what does this portend for IBDs? Unless their advisors learn more about income planning, the future isn’t bright. Most Boomer retirees will be “constrained”—that is, their retirement nest eggs won’t be large relative to the amount of monthly income they want. Consequently, they’ll need outcome-focused income-generation strategies that protect them against sequence-, inflation- and longevity-risk and help them avoid emotional decisions.

But, the fact is, most accumulation-focused advisors don’t know how to build, illustrate and present such risk-mitigating strategies. That’s where the IBD’s core strength will hurt them.

Most advisors need education and guidance in order to acquire the income-planning skills necessary for success. But the IBDs’ own cultures, which emphasize independence, prevent them from leading their flocks to the promised land of asset consolidation. It’s just not part of their DNA.

As millions of Americans reach age 65 and begin to think about income, it will be interesting to see whether or not IBDs take a genuine leadership role in that specialty. I argue that they should try, even though it might cross their cultural grain. If the sheer scale of the retirement income opportunity doesn’t motivate them, the fee-compressing impact of the DOL’s fiduciary proposal certainly should. When every dollar yields less compensation, the only way to survive or grow will be to manage more dollars. Consolidation, anyone?

DOL proposal could “revamp” advisor business practices: Fitch

Posted on July 9, 2015 by Editorial Staff -

Many registered investment advisors (RIA) and the financial advisors of broker dealers are likely to experience “significant revamps of business practices” if the DOL conflict-of-interest proposal takes effect in its current form, analysts at Fitch Ratings reported this week.

“The proposed rules raise the risk of regulatory enforcement and/or trial bar litigation, and will likely force RIAs to do more to prove that a client’s product choices indeed meet the individual’s best interests,” the Fitch analysts wrote.

But Fitch did not suggest that the proposal’s impact on the distribution and sales of annuities would be so great as to hurt the financial strength ratings of insurers who issue them.

“For it to start affecting the ratings of insurance companies, you would have to see adoption of best interest standard across a broader range of products,” said Doug Meyer, managing director, insurance, at Fitch Ratings in Chicago, in an interview with RIJ this week.

Meyer added that insurers might even be better off not selling as many variable annuities, a product whose at-times underpriced lifetime income guarantees may pose potential long-term risks for some of the insurers who have sold large numbers of them.

The Labor Department’s April 21 fiduciary proposals promote the proposal’s new “best-interest” standards that provide protections to investors for retirement accounts and annuities.

As proposed, the new standards would greatly expand the universe of individuals and corporations covered under the 1974 Employee Retirement Income Security Act (ERISA). That is, the $7 trillion rollover IRA market and, potentially, any producer who sells or manufactures products to or for that market, would be treated as if it were part of the highly-regulated 401(k) world.

The Fitch analysts were unsure how, in the real world, advisors or agents could promote specific products while simultaneously telling clients about the merits of competing investment or insurance options. “The precise extent to which an advisor would be required to explain product solutions not offered in order to demonstrate serving a client’s best interest is not yet entirely clear,” they wrote.

Fitch suggested that the DOL proposals “could curb the willingness of agents to promote complex and higher fee products to that market,” an apparent reference to fixed indexed annuities and some variable annuities.

Since an estimated 40% or more of current FIA sales are financed with qualified money, such a curb might have a big impact on FIA sales, which now run at about $11 billion per quarter.

With variable annuity sales softening and sales of income annuities still relatively small, fixed indexed annuities have become the most vibrant part of the annuity business—in part because of the appeal of their safety and their lifetime income riders but also because they pay some of the most aggressive sales incentives to agents and brokers.

Regarding the potential liability associated with selling complex products, “asset managers and insurance companies would also bear responsibility for examining distribution policies and commission structures paid to independent and affiliated distributors that sell many of the investment products reaching retirement accounts,” Fitch analysts wrote.

“Annuity products, arguably viewed by some investors as costly relative to lower priced products, could see fees pressured and/or commissions reduced under greater scrutiny,” their report said. The rest of the report read as follows:

“Adding to the challenge is the complexity of annuities, with guarantees that are difficult to value. Obtaining affirmations from clients that all features of any complex product are understood could become more common, but also burden the sales process and hurt volumes.

“ERISA rules were designed to ensure that trustees and plan sponsors were acting with prudence and not self-dealing. While investment advice to individuals planning for retirement has avoided being covered under ERISA, the proposals sweep general wealth and retail advisors under the rule in the interest of ensuring they are acting in client’s best interest.

“Meanwhile, life insurance companies and asset managers would be contractually bound to enhance conflict risk management, publicly disclose fee practices and provide enhanced disclosures of compliance to regulators.

“Under current fiduciary rules, a person responsible for serving in a fiduciary’s best interests (such as a trustee) may not receive compensation for selling to the fiduciary and may not self-deal in the same investment scheme for which he or she oversees as a fiduciary.

“Limitations on commission structures could have a disproportionate impact on the sale or fee structures of investment and retirement products sold in the middle market, which generally tends to have more fee-sensitive customers.

“Effectively, the rules may encourage some brokers to adopt advice-for-fee models for their advisors as a means of compensating them for the compression (or elimination) of their commissions.

“In an effort to preserve commissions while retaining certain established sales structures, the Labor department has established multiple levels of exemptions that could keep many practices in place, provided that compliance with the principles of rules is met.

“Overhauls over the past years to the UK, German and Australian retirement markets have included complete bans on commissions without resulting in significant curbs to dollar sales of the products, although there have been indications of the middle-market customer being less targeted. Higher-end customers have been offered and generally accepted moving to fee-for-advice models.

“In a sign of the political sensitivity of the issue, earlier in June, the House of Representatives’ 2016 appropriation bill for the department included a provision that would block the agency from spending any of the annual funds on finalizing, implementing, administering or enforcing the proposed rules.

“Full implementation is not envisioned until third-quarter 2016 at the earliest, giving all affected parties meaningful time to prepare for and respond to the changes. A comment period on the proposals closes on July 21.”

Offshore AUM to exceed US AUM by 2019: Cerulli

Posted on July 9, 2015 by Editorial Staff -

By 2019, more than half of the world’s assets under management (AUM) will be managed outside the U.S., according to the 14th iteration of Global Markets 2015: Key Insights into a Dynamic Landscape, from Cerulli Associates.

Global AUM is expected reach US$106 trillion by 2019, but “managers need to be realistic about the efforts required to win business in high-growth markets,” said a Cerulli release this week.

While China is too big an opportunity for Western asset managers to ignore, “regulation continues to favor local managers,” said Ken F. Yap, director of global analytics at Cerulli. And “with the local market firing on all cylinders, appetite to invest overseas is minimal,” he added.

Meanwhile, in Taiwan, where bond funds led a 21.8% increase in offshore AUM, Taiwanese authorities plan to favor local managers by requiring foreign managers to boost onshore business to obtain fund approvals.

In Brazil, “positive regulatory changes and the establishment of a truly independent distribution network will further open the market to cross-border managers and fuel demand for global products” in 2015, Cerulli’s analyst said.

Cerulli noted that despite the tiny asset base of Chile’s retail investment segment, that long, narrow, Pacific-facing country has high growth potential. “The fast-growing pension market in Mexico is [also] looking increasingly attractive for cross-border managers,” the report said.

Regarding Spain, Cerulli Europe research director Barbara Wall wrote, “The market will continue to grow at a healthy pace, yet slower than the one seen over the past couple of years. Fund-of-funds vehicles are the cross-border asset managers’ favorite point of entry and this segment is booming—total assets in 2014 more than doubled to €30.6bn ($33.5bn) from €15bn (US$16.4bn).” Almost all of those vehicles, 96%, are “ex-house,” the report said, meaning that they invest primarily in non-proprietary funds.

New whitepaper attacks DOL conflict-of-interest proposal

Posted on July 9, 2015 by Editorial Staff -

Two well-known fixed index annuity advocates, Jack Marrion and Kim O’Brien, have published a white paper criticizing the rationale behind the Department of Labor’s conflict of interest proposal, whose public comment period comes to an end on July 21.

The white paper, entitled “The Flawed Arguments of the Fiduciary-Only Rule,” was produced for an organization called Americans for Annuity Protection. O’Brien, the former director of the National Association for Fixed Annuities (see today’s RIJ cover story), is AAP’s vice chairman and CEO.

Although the DOL proposal, in its current form, allows the payment of commissions to sellers of annuities if they pledge to act in the client’s “best interest,” Marrion and O’Brien argue that the proposal would nonetheless have a “devastating” effect on the entire annuity business.

“If the rule is enacted as written,” the authors write, “it will cause a severe disruption for many securities brokers and dealers but will be devastating for those who sell annuities and those who want to buy annuities. The disruption will negatively affect the 50%-plus of consumers who purchase an annuity as their Individual Retirement Account (IRA).”

In addition, they say, “it sets in motion a process that will more than likely eliminate all traditional forms of compensation other than fee-based and, consequently, eliminate thousands of small and medium-sized businesses who rely on commissionable and asset-based compensation in addition to the fee-for-advice model. It will also likely pull in non-qualified retirement annuities under the guise of ‘harmonization.’”

The 26-page white paper also makes assertions that FIA advocates have used previously when threatened with federal regulation: that state insurance laws are adequate to ensure consumer protections; that more complaints are filed against securities brokers than annuity sellers; that asset-based fees cost the consumer more in the long run than one-time sales commissions do; that suppression of commission-based sales will hurt members of minority groups disproportionately.

The Bucket

Posted on July 9, 2015 by Editorial Staff -

Cetera picks Broadridge as mobile platform provider

Cetera Financial Institutions, a self-clearing broker-dealer, has chosen Broadridge Financial Solutions, Inc., as its mobile solution provider, it was announced this week.

Broadridge Mobile provides market, portfolio and account information and trading tools for funds, equities and options.

The Broadridge Mobile platform is intended to “increase collaboration, optimize data management and deliver an integrated experience to financial advisors and investors on a single global platform,” a Broadridge release said.

The solution offers document-sharing between advisors and clients, client search and reporting, account inquiry, and book-of-business analysis in multiple languages and currencies.

Broker-dealers, banks, mutual funds and corporate issuers outsource investor communications, securities processing and business process solutions to Broadridge, which employs about 6,700 people in 14 countries and processes more than $5 trillion in fixed income and equity trades per day.

Cetera Financial Group includes Cetera Investment Services LLC and Cetera Investment Advisers LLC. All are part of RCS Capital Corporation, a provider of retail advice, wholesale distribution, investment banking, capital markets, investment research, investment management and crowdfunding services.

Four myths about marketing to RIAs

Asset managers make four erroneous assumptions when trying to distribute their investment products to the fragmented registered investment advisor channel, according to a new study from kasina, a DST company that provides distribution intelligence technologies, advanced analytics and research, and strategic advisory services,

The study, “Debunking 4 Myths of Selling to RIAs—Strategies to Prospect and Serve them More Effectively,” is based on a survey of 150 RIAs and interviews with distribution executives at asset management firms.

“Diversity within the RIA channel has long made it a challenge to prospect, and the disparities continue to increase,” said Tracy Needham, senior research analyst for kasina, in a release.

“Practices now range from one-man shops to firms large enough to rival the wirehouses while investment approaches run the gamut. Meanwhile, there’s no home office to serve as a conduit and the ranks of breakaway and dually-registered advisors continue to swell.”

According to kasina, asset manager distribution teams wrongly assume that:

Models are not a driving force with RIAs
Multi-asset funds are the best antidote for active managers
Meeting with RIAs equals investments from RIAs
RIAs don’t want to hear a product pitch

kasina’s RIA study shows:

The average RIA sales team is 11 people (internal and external), and growing.
When asked what asset managers could do to increase the likelihood of the RIA choosing their products, suggestions overwhelmingly (40%) focused on providing more detailed information on the investment process and fund management.
31% of RIAs cited some action a wholesaler had taken, like offering helpful info or a service or meeting them at an event, as the reason they granted a meeting.
40% of RIAs suggested that more detailed information on the investment process and fund management could increase the likelihood of an asset manager’s products being selected.

Kansas City, MO-based DST Systems, Inc. is a global provider of information processing and servicing solutions to companies around the world.

New York Life and John Hancock complete $25 billion reinsurance deal

New York Life has completed its acquisition, through reinsurance, of a net 60% interest in John Hancock Financial’s closed block, consisting mainly of participating whole life insurance policies. The transaction, initially announced in December 2014, has received all necessary regulatory approvals.

The closed block of 1.3 million in-force policies with a face amount of more than $25 billion was established in connection with John Hancock’s demutualization in 2000. Through reinsurance arrangements, New York Life has assumed $7 billion of statutory reserves.

New York Life’s NYL Investors, LLC unit, which oversees the company’s general account investments, manages approximately $12 billion in new assets as a result of the deal.

New York Life’s general account assets (cash and invested assets on a consolidated basis) have risen by about $16 billion this year and now exceed $213 billion, a record high for the company.

John Hancock, the U.S. division of Manulife Financial Corporation, will continue to administer the closed block policies, including paying claims and dividends. Terms of the transaction were not disclosed.

Prudential sponsors webcasts aimed at African-American investors

Weekly 10-minute video features on personal finance are appearing in the current 16-week season of The Root Live: Bring It To The Table. The features are co-produced by Prudential Financial and The Root, an online news and commentary service at African-Americans.

The new videos feature “thought leaders discussing a range of financial, career and family issues, including Stop Being the Family Bank, The High Cost of Depression, Learning to Live with Debt, Selling My House and Eldercare, according to a release. Programming for the new season resumed in May and continues through August, with new installments airing on Wednesdays via www.theroot.com/therootlive.

In the videos, The Root’s contributing editor, Harriette Cole, interviews experts such as Derrick McDaniel, author of “Eldercare: The Essential Guide to Caring for Your Loved One and Yourself,” Patrice Washington, a personal finance columnist and commentator, and Mandi Woodruff, a personal finance expert with Yahoo Finance.

Some of the episodes of The Root Live: Bring It to the Table include:

“Living the Fabulous but Broke Lifestyle,” with Gayle Hawkins, financial professional, Prudential Advisors
‘Being the only one: How to find mentors to advance my career,” with Marshall Alston, vice president, Human Resources for Prudential Advisors
“Should I Marry if My Partner has Tax Problems?” with Tiffany “The Budgetnista” Aliche
“Do You have a Legacy Plan?” with ShirleyAnn, Robertson, a Prudential financial professional

Founded in 2008 under the leadership of Prof. Henry Louis Gates Jr. of Harvard University, The Root is owned by the Washington Post Company.

Big Dutch pension funds receive SIFI-like designations

Pension funds in the Netherlands with at least €4bn ($4.38bn) in assets will be designated as OOBs or “organizations of public interest,” IPE.com reported this week after Dutch finance minister, Jeroen Dijsselbloem, announced the new policy in a letter to Parliament.

Managers of power, water and gas grids, as well as housing corporations, would also be designated as organizations of public interest, Dijsselbloem said. Non-listed banks and insurers already have such a designation.

The OOBs must comply with stricter accounting rules. An OOB must first consult the Financial Markets Authority before hiring an accountant to check an annual account. An OOB’s audit certificate will also require an additional quality approval, given by an independent accountant.

Pension funds are comparable with other financial institutions because they value their assets in similar ways, Dijsselbloem said, and they discount their liabilities in ways similar to the ways insurers establish their financial obligations. Several Dutch pension funds, accountants already provided the extensive certificates required for an OOB, the report said.

Broker/dealers to pay $30 million in restitution

Wells Fargo, Raymond James and LPL Financial have been ordered by the Financial Industry Regulatory Authority (FINRA) to pay more than $30 million in restitution, with interest, to affected customers for not waiving mutual fund sales charges for certain charitable and retirement accounts.

Financial advisors working for those firms failed to fulfill company promises to waive certain sales charges on transactions with more than 50,000 accounts that were eligible for the waivers. The companies reported the problems to FINRA.

Wells Fargo Advisors, LLC and Wells Fargo Advisors Financial Network LLC will pay an estimated $15 million. Raymond James & Associates, Inc., and Raymond James Financial Services, Inc., will pay about $8.7 million. The firms agreed to the entry of FINRA’s findings without admitting or denying the charges.

LPL Financial LLC will pay about $6.3 million, plus restitution to eligible customers who purchase or purchased mutual funds without an appropriate sales charge waiver from January 1, 2015, through the date that the firm fully implements training, systems and procedures related to the supervision of mutual fund sales waivers.

“FINRA’s sanctions acknowledge that the firms detected and self-reported these errors, and will provide full restitution to customers,” said Brad Bennett, FINRA’s Executive Vice President and Chief of Enforcement.

Mutual funds offer several classes of shares, each with different sales charges and fees. Typically, Class A shares have lower fees than Class B and C shares, but charge customers an initial sales charge. Many mutual funds waive their upfront sales charges on Class A shares for certain types of retirement accounts, and some waive these charges for charities.

Mutual funds available on the retail platforms of Wells Fargo, Raymond James, and LPL offered these waivers to charitable and retirement plan accounts under limited circumstances and disclosed them in their prospectuses.

However, at various times since at least July 2009, Wells Fargo, Raymond James and LPL did not waive the sales charges for affected customers when they offered Class A shares. As a result, more than 50,000 eligible retirement accounts and charitable organizations at these firms either paid sales charges when purchasing Class A shares, or purchased other share classes that unnecessarily subjected them to higher ongoing fees and expenses.

Wells Fargo, Raymond James and LPL failed to adequately supervise the sale of mutual funds that offered sales charge waivers. The firms unreasonably relied on financial advisors to waive charges for retirement and eligible charitable organization accounts, without providing them with critical information and training.

‘No Comment’ from NAFA about its Form 990s

Posted on July 8, 2015 by Kerry Pechter -

The folks at the National Association for Fixed Annuities offered no comment yesterday when I called to ask about a cryptic paragraph that appeared on the next-to-last page of the organization’s draft 2014 Form 990, the tax return for organizations exempt from income tax.

The paragraph said, “in 2012, $125,000 was transferred from a NAFA bank account and into the personal bank account of an officer of the organization. The funds were subsequently returned to NAFA in 2014. It was also found that in 2012 said officer diverted $32,000 of unauthorized income into her household.”

The note didn’t name the evidently female officer. But the only person listed as a NAFA officer, employee or contract worker on the 2014 tax return, dated May 7, 2015, was Kim O’Brien. She was NAFA’s chief executive from 2003 until her sudden departure in January of this year.

The paragraph on page 20 continued: “Additionally, $24,000 of non-business, personal expenses of an officer were paid out of NAFA funds. The $24,000 was paid back in a settlement agreement with said officer and will be 1099’d to the officer as income in 2015.”

I left a voice message at NAFA’s headquarters—NAFA has a mailing address in Washington, DC, but a Wisconsin phone number—and soon received a call from (Charles R.) Chip Anderson, who replaced O’Brien as executive director, effective May 1 of this year. Anderson was a NAFA board member of NAFA for six years, serving as secretary, treasurer, vice-chairman and chairman.

Anderson declined to confirm that O’Brien was the officer mentioned in the Form 990. He wouldn’t answer any other questions about information on the form. He said that O’Brien’s departure was “old news” and “on the public record.” [RIJ reached O’Brien today by email and sent written questions to her, but we did not receive a response by today’s noon deadline.]

O’Brien may be out, but she’s not down. The CEO of a new annuity pop-up site, she is cheerleading for fixed indexed annuities as loudly as ever. And she has not run out of professional capital. Within the industry, she’s given at least partial credit for preventing the SEC from usurping regulation of fixed indexed annuities during the battle over Rule 151A just a few years ago.

Now she’s engaged in the latest annuity regulatory battle, the fight over the DOL fiduciary rule, which threatens to “devastate” the $44 billion FIA business by pulling tax-deferred rollover IRA money under the ERISA tent.

Just today, O’Brien posted an opinion piece on Producersweb.com, called, “Beyond the rhetoric: Three real life impacts of the DOL rule.” Yesterday, she published a 26-page whitepaper, co-written with FIA authority Jack Marrion, called “The Flawed Arguments of the Department of Labor’s Fiduciary-Only Rule.”

According to her LinkedIn page, she’s vice chairman and CEO of Americans for Annuity Protection, “a nonprofit 501c4 organization formed in 2015 by insurance and annuity veterans to preserve a diverse and competitive marketplace for annuities, which serve Americans across the economic spectrum.” The chairman is Paul Feldman, founder of Insurancenewsnet.

If the board members of these organizations were to look at NAFA’s Form 990s from the O’Brien years, they wouldn’t learn much about who worked there. For instance, Kim’s sister, Pam Heinrich, still works as legal counsel to NAFA, and Kim’s nephew, Scott Hinds, remains communications director at NAFA, but neither of them are listed as contract workers or employees on the forms.

In 2014, O’Brien was the only employee identified. Her salary was listed at $163,958, up from $119,167 in 2013. Other salaries and wages paid were a combined $73,709. Legal fees amounted to $63,357. In 2012, no employees or salaries were reported at all; there was an expense of $171,735 for management. I asked NAFA’s accountant, from Anick & Associates, to explain the numbers, but she said that she was just a document preparer, not an auditor.

In a financial industry that trembles only at trillions, the diversions described in NAFA’s 2014 Form 990 might seem trivial. Unlike larger retirement industry non-profits like the Insured Retirement Institute or the Employee Benefits Research Institute, NAFA may not be able to afford the legal and financial controls of a big shop. (I have nothing against FIAs; the concept is interesting, although the value is difficult to gauge. I do mistrust the contrast between the industry’s pious public positions and the hucksterism of its sales culture.)

But O’Brien’s tenure at NAFA shouldn’t go unexamined. Fixed indexed annuities are the hottest-selling product in the annuity space right now, and anything unusual that shows up on the public record about one of its leading opinion-makers—even if it’s just a matter of sloppy recordkeeping—is bound to attract, and merit, attention.

The Overlooked Income Vehicle, III

Posted on July 2, 2015 by Kerry Pechter -

The rollover IRA has already surpassed the 401(k) plan as the platform from which U.S. retirees will draw most of their private retirement income. But some entities—Department of Labor officials, some plan sponsors and plan providers—would like to see that trend slow down or even reverse.

They’d like more Americans to eschew rollovers and, instead, keep their savings in their 401(k) plans, and use a systematic withdrawal plan or SWP—monthly electronic transfers from plan to bank account—to provide regular income over a specific portion of their retirement or for life.

The pro-SWPs crowd is smaller and quieter than the horde of rollover advocates, for obvious reasons. Huge profits await advisors, asset managers and insurers who capture some of the $7.2 trillion rollover treasure. SWPs don’t offer anybody much in the way of spoils, unless you count the savings that retirees might realize from having access to institutionally priced products and services.

Still, SWPs advocates exist, mainly among plan sponsors who see them as a potential way to fulfill their fiduciary duties and maintain economies of scale in their plans, and among plan providers that have financial incentives to retain plan assets.

SWPs cheerleaders

A SWPs program, for instance, was among the four measures for improving DC plan design, along with making roll-ins to 401(k)s easier, tightening loan restrictions, and establishing auto-enrollment, that PlanSponsor magazine recommended in its annual DC plan review earlier this year.

The magazine quoted one plan advisor as saying that more plan sponsors are coming to regard establishing a robust SWPs program as “a sort of compromise” between offering their retired participants an in-plan annuity and risking a breach of fiduciary duty by not offering them any income option at all.

The Institutional Retirement Income Council (IRIC), a fledgling trade group consisting of retirement plan providers, has recommended SWPs to plan sponsors. In a May 2015 white paper, IRIC listed SWPs as one of three withdrawal solutions that have the “potential to increase retirees’ incomes by five to 20% or more.” Immediate annuities and living benefit riders on target date funds were the other two.

That whitepaper, written by actuary Steve Vernon of the Stanford Center for Longevity, cited a 2013 report, “The Next Evolution in Retirement Plan Design,” prepared by the Society of Actuaries, the SCL, Wade Pfau of The American College and ERISA attorney Fred Reish.

That report included systematic withdrawals as one of several “Characteristics of a Successful Retirement Program.” SoA like SWPs because “the process required to change providers prospectively with remaining assets is usually straightforward” and “in-plan solutions increase assets under management, helping to reduce unit costs for administration.” On the other hand, SoA was wary of SWPs because “retirees may think that the income is guaranteed for life when it really isn’t. Not only might they deplete their savings, but they may be surprised to learn that it can happen.”

What would your SWPs look like?

A plan sponsor who wanted to introduce a SWPs program would have to decide what kind of installment distribution method it wanted to offer. There are lots of ways to structure a SWPs. The function can be outsourced to a managed account provider like Financial Engines. There might be a menu of elective SWPs-based options, perhaps including a default program for those who don’t choose.

Jack Towarnicky, an Ohio-based plan consultant, suggested a non-guaranteed SWPs structure that would nonetheless try to provide lifetime income. “I’d like to see a plan sponsor add a payout based on life expectancy, as a standard option for people who have reached age 55 [and have been terminated] or who have reached age 59½ [when then 10% penalty expires]. It would work just like the MRD after age 70½,” he said.

“If we’re really concerned about longevity risk, then we should change Section 401(a)(9), the MRD rules, so that you’re not required to take out more than 5% in any year,” Towarnicky added. “The required withdrawal reaches 5% at about age 78. The other possibility is to couple the systematic withdrawal with a deferred income annuity.”

In Britain, such a program has just been proposed. Last weekend, Britain’s new publicly-sponsored defined contribution plan, called NEST, issued a “blueprint” for a default decumulation plan that its auto-enrolled participants could use when they reach retirement.

According to this three-bucket blueprint: At retirement, 10% of a participant’s tax-deferred savings would go into a cash fund and 90% would go into a centralized, risk-managed fund. The larger fund would generate an inflation-adjusted monthly income, proportionate to the assets invested, until age 85. At age 85, if the participant was living, he or she would begin receiving payments from a deferred income annuity that will have been purchased at age 75 with monies collected gradually from the income-generating fund between age 65 and 75.

Here in the U.S., Vanguard offers its participants two types of SWPs. In June, the company published an article on its website (“Helping retirees stay on the upside of drawdowns”) that described its Guided Installments program. Under this free, do-it-yourself variation of SWPs, retired participants can use web-based calculators to determine how much they need to withdraw from the 401(k) accounts as well as how much they can afford to withdraw and still maintain an 85% probability that their money will last until age 95. The service also includes rebalancing reminders and automatic adjustments for RMDs and inflation.

For a fee, Vanguard participants also have the option of putting their savings into managed accounts run by Financial Engines, for accumulation and distribution. In the distribution, a Financial Engines program called Income+ (Income Plus) begins producing a payout rate designed to last until the retirees’ early 90s. For retirees who want insurance against longevity risk, Income+ shifts enough money into bonds during retirement to pay for an optional deferred income annuity, to be purchased outside the plan.

Getting from here to there

While there’s no shortage of SWPs-based solutions, there’s no clear path from the status quo to a world where a worker would be auto-enrolled into a target date fund in a 401(k) plan, have his or her deferrals auto-escalated, and then defaulted into a SWPs program with built-in or optional longevity insurance—thus bringing defined benefit-type security into the defined contribution world.

The only ones who could lead such a trend would be plan sponsors or participants. But no two plan sponsors are alike in their sense of the scope of their fiduciary responsibility, their ability or willingness to finance the participant education that a SWPs program would require, or their willingness to accept the long-term liabilities that choosing vendors for SWPs might entail. They might be reluctant to offer SWPs for the same reasons that they abandoned DB plans for DC plans.

The future of SWPs might depend in part on the Department of Labor’s conflict-of-interest proposal, and whether or not it passes in its current form. If it does, plan sponsors and their advisors might feel a greater fiduciary obligation to at least include a low-cost SWPs program among the distribution options they offer retiring participants.

On the other hand, if the proposal’s language is softened to accommodate the status quo, it’s hard to see where a champion for SWPs might emerge from, or why the torrent of savings from ERISA-regulated 401(k)s to more permissive rollover IRAs wouldn’t continue unabated.

Four Little Words, Many Billions of Dollars

Posted on July 2, 2015 by Kerry Pechter -

A few words can be worth billions of dollars. In the case of the Labor Department’s proposed conflict-of-interest regulation, that’s literally true. The content of a short phrase in the rule could stop commission-paid broker-dealer reps from continuing to sell to a market they covet: the $7 trillion (and growing) IRA rollover market.

The decisive words are “act without regard to.” They appear in a sentence of the proposed regulation’s so-called Best Interest Contract Exemption: “Further, under the best interest standard, the Adviser and Financial Institution must act without regard to the financial or other interests of the Adviser, Financial Institution or their Affiliates or any other party.” (Italics added.)

Given the fact that those entities are in business to make money, that phrase presents real problems. Even though the DOL claims that banning commissions was never its goal, annuity industry lawyers believe those words would make it effectively impossible for registered reps and insurance agents to accept commissions from manufacturers for selling variable annuities or mutual funds to IRA owners.

In short, the phrase is a deal breaker. Unless those words are changed to something the industry prefers, such as, “while taking into account the fact that,” said Steve Saxon of the Groom Law Firm (below at left) at the Insured Retirement Industry conference Monday, he would advise his industry clients to “fight this regulation at all costs.” That raises the question: Will the DOL back down and relax the language in the proposal to preserve business as usual?

Not since the battle over SEC rule 151A during the latter years of the George W. Bush presidency, when the fixed indexed annuity industry successfully used the courts to stop the SEC from defining FIAs as securities and regulating them as such, has there been such a bitter contest over the way annuities should be regulated.

Another potential deal breaker involves the proposal’s apparent attempt to force sellers of securities products, including variable annuities, to a higher standard of sales conduct (the proposed Best Interest standard) while allowing sellers of insurance products, such as fixed annuities, to meet the current standard, as described in Proposed Transaction Exemption 84-24, which allows commissions. This would put variable annuities at a distinct disadvantage.

The variable annuity industry and its attorneys are going to fight this, perhaps as energetically as they fight the “without regard to” language. “All annuities should be covered by 84-24,” Saxon said. “We’ve relied on that [exemption] since the 1970s.” Said Abigail Pancoast, chief counsel of retirement plan services at Lincoln Financial Group, “The DOL needs to hear from us that VAs with guarantees are more like fixed annuities than like securities.”

During the conference, Saxon was asked what he thought the public policy objective was behind the DOL’s proposal. “It’s all about control,” he said. “This is the clearest way for the DOL to get Title I [of ERISA] to apply to the IRA space. But they’re not going to get a deal on this regulation if they make it unworkable. It has to be made workable so the industry can sell proprietary products.”

Saxon was asked if the DOL might simply wanted to make the rollover IRA market less expensive, more objective and more transparent for tax-deferred account holders. He responded indirectly.

“They’re frustrated,” he said. “For 40 years they’ve lost case after case trying to assert that the fiduciary standard applies to IRAs. There’s a contradiction in what they want. They really want the money to stay in the 401(k) plans. But the reality is that the money has moved to the IRAs. I have to advise my clients to fight this regulation at all costs and to support legislation that opposes it.”

The future of the proposal may depend on which party wins the White House in November 2016. The DOL says it expects the final version of the proposal to be published in the spring of 2016. That would be eight months after the public hearings on the matter that the DOL has scheduled for mid-August—the heart of vacation time. Opponents of the rule hope to slow or stop the process with legislation in the Republican-controlled Congress, but such legislation would face a certain president veto.

A three-bucket blueprint for de-accumulation, from the U.K.

Posted on July 2, 2015 by Kerry Pechter -

NEST, the UKs’ state-backed, auto-enrolled defined contribution plan for workers without a employer-sponsored plan, has created a “blueprint” for a default income distribution strategy from their “pension pots”—aka tax-deferred savings—in retirement.

The strategy resembles the kind of three-bucket approach (involving a cash bucket, an income-producing bucket, and a longevity insurance bucket that produces a flat income starting at age 85) that various decumulation experts in the U.S. have proposed over the past decade.

Now that Britain has dropped its policy of incentivizing DC plan participants to buy life annuities at retirement (or, at the least, to annuitize any unspent tax-deferred assets at age 75), the directors of NEST (National Employment Savings Trust) felt that it should fill the policy vacuum by designing a suitable default decumulation strategy.

Launched in 2012 after the UK government committed itself to universal auto-enrollment of UK workers in a retirement savings plan, NEST has grown to about 2.2 million members with about £475m ($738m, €660m) invested. That’s less than £250 per member, on average, so the de-accumulation strategy might not be implemented for a while. That doesn’t stop the model from serving as an informal guide for individual retirees right away.

“I wish we had a similar default decumulation strategy that average retirees could follow in the United States,” said Michael Finke, who teaches financial planning at Texas Tech University, in an interview with RIJ. “When asked whether there was an ideal decumulation product at the Morningstar conference last week, my response was a combination of a managed payout fund, a QLAC, or a participating variable annuity. The only question is, how will a retiree manage a decumulation strategy between 65 and 85.”

“Without commenting on the specifics, I think this represents a much better ‘core’ approach than what we see in the US 401(k)/DC space,” said David Blanchett, Morningstar’s chief retirement researcher. “This type of strategy is clearly designed to be attractive both from an outcomes perspective and from a behavioral perspective (i.e., is something that will both help retirees and something they would potentially be interested in doing. I often worry retirement research often focuses too much on the former, not the later). I think this is definitely a step in the right direction for defaults in decumulation.”

The three-part strategy (click on chart below right) was developed with input from British groups as well as U.S. firms like AllianceBernstein, BlackRock, JP Morgan, Milliman, and State Street Global Advisors. So far it’s just a blueprint; NEST participants have just started saving. NEST said that it is hoping that the financial services industry will create new products that can help bring it to life.

The strategy, which is intended to function without input from the retiree, is structured as follows (assuming a NEST participant who retires at age 65 and doesn’t opt for another distribution method):

On retirement, 10% of the participant’s target-date fund savings would enter a cash account, available for emergencies and short-term expenses. The other 90% would be invested in a fund that would be managed—the risk management techniques are TBD—that would generate a level (in real terms) monthly income from age 65 to age 85. Any excess earnings generated by the retiree’s investments between the ages of 65 and 85 would spill over into the cash account. The income objective would be met by distributions of principal, with an eye toward spending down the fund by age 85.

“Drawing the money down over a set number of years until phase three, when the later-life protected income kicks in, would be easier to manage than attempting, through pure investment in capital markets, to make the pot last indefinitely,” according to the blueprint.

Retirees tend to avoid annuities that involve a sudden, irrevocable transfer of assets. NEST deals with that reality by having retirees contribute to an annuity purchase fund gradually. Starting at about age 65, 1.5% to 2% of the income fund would enter a side fund each year; at about age 75, the side fund would be locked into the purchase of a deferred income annuity. It would start making payments at age 85.

Two retirement experts who reviewed the NEST proposal, Wade Pfau of The American College and advisor Harold Evensky, commented that it wouldn’t be easy for NEST to manage a fund to meet all the desired objectives. For instance, the NEST blueprint says that the income from the DIA at age 85 should equal the SWP income at age 84. But it didn’t show exactly how a 1.5% to 2% transfer (from a presumably shrinking account value) for 10 years would pay for a DIA that fulfilled that projection in all markets for all participants.

“It’s an interesting proposal,” said Wade Pfau in an email. “I’m in an ongoing research project with Steve Vernon and Joe Tomlinson, and one of the issues we are looking at is how it is actually quite difficult to calibrate the income flows in the transition from systematic withdrawals to when a deferred income annuity kicks in.

“Especially, at least in the U/S., DIAs do not provide an option to inflation-protect the initial spending amount. In practice, there will have to be a lot of effort put into the thought process about how much to put into the DIA each year. [Contributions of] 1.5% to 2% may or may not be appropriate.”

Referring to the section of the blueprint that says the DIA fund would remain liquid, Evensky, wrote, “I’m not sure how any product can meet this criteria.” But “I was impressed with its acknowledgement that ‘a one-size-fits all approach may result in some people being on paths that are less than perfect,’” he added.

“Although there are certainly issues and suggestions raised that require further thought, all in all I believe (a few examples below) it is exceptionally thoughtful (particularly the guiding principals) and well done,” Evensky wrote in an email to RIJ.

The NEST blueprint appears to reflect a belief that it makes little sense to try to manage a portfolio so that it lasts for an indeterminate period—a lifespan—and that annuities offer the most value as insurance against extreme old age. Once you accept the philosophy behind this strategy, it just becomes a matter of execution.

“We believe this is possible but it requires innovation,” said Mark Fawcett, chief investment officer at NEST, in a news release. “We’ve developed an evidence-based blueprint for how to meet members’ needs. We hope this will stimulate the innovation necessary for us and others to deliver what members will need and want.”

OneAmerica buys BMO’s U.S. retirement business

Posted on July 2, 2015 by Editorial Staff -

OneAmerica has purchased the U.S. retirement division of Bank of Montreal (BMO), a move that will make Indianapolis-based OneAmerica “a major player in the advisor-sold DC market,” NAPAnet reported this week.

The BMO purchase, along with recent acquisitions of the retirement division of City National and of McCready and Keene, an actuarial and employee benefits consulting firm based in Indianapolis, will give OneAmerica $70 billion of defined contribution AUM. The BMO sale is expected to close in the third quarter of 2015, and will adopt the name OneAmerica Retirement Services LLC.

OneAmerica will continue business operations from BMO Retirement Services’ current locations, and most clients will continue to work with their current service teams, a release said. BMO Retirement Services employees covered by the agreement will become OneAmerica employees. Terms of the agreement were not disclosed.

According to NAPAnet, OneAmerica serves more than 11,000 plans in the mid-sized market and has over $30 billion in retirement assets under administration. BMO’s U.S. retirement services business has more than 200 professionals with approximately 830 plans.

John Hancock and LPL in participant advice pact

Posted on July 2, 2015 by Editorial Staff -

Plan sponsors and participants served by John Hancock Retirement Plan Services (JHRPS) who have contracted with LPL Financial to use its Employee Advice Solution will receive administrative support from JHRPS, it was announced this week.

Launched by LPL in 2014, the EAS tool can deliver personalized participant advice through an online service that collects financial information about a participant. Participants can use that option—all the way through retirement, if they wish—or managed their accounts on their own, JHRPS said in a release.

EAS is part of LPL’s Worksite Financial Solutions, a website platform that provides financial education and planning tools. Participants can engage with a financial advisor either face-to-face, online, or over the phone. The platform is integrated with LPL’s reporting and monitoring tools for plan advisors.

“JHRPS provides a daily participant-level data feed when requested by plan sponsors, enabling LPL advisors to provide tailored financial advice and facilitate a closer relationship between advisors and plan participants,” the release said.

Bank of International Settlements expresses doubts about low rates

Posted on July 2, 2015 by Editorial Staff -

In its 85^th annual report, the Bank of International Settlements in Basel, Switzerland, strikes a cautionary note regarding the persistent low interest rate policy practiced by the world’s central bankers and its ambiguous impact on the global economy.

“There is something deeply troubling when the unthinkable threatens to become routine,” write the authors of the report. The BIS calls for a shift to a longer-term focus in policymaking, with the aim of restoring sustainable and balanced growth.

Below are summaries of the report’s chapters, with links to the further content:

I. Is the unthinkable becoming routine?

Globally, interest rates have been extraordinarily low for an exceptionally long time, in nominal and inflation-adjusted terms, against any benchmark. Such low rates are the most remarkable symptom of a broader malaise in the global economy: the economic expansion is unbalanced, debt burdens and financial risks are still too high, productivity growth too low, and the room for manoeuvre in macroeconomic policy too limited. The unthinkable risks becoming routine and being perceived as the new normal. More…

II. Global financial markets remain dependent on central banks

Accommodative monetary policies continued to lift prices in global asset markets in the past year, while diverging expectations about Federal Reserve and ECB policies sent the dollar and the euro in opposite directions. As the dollar soared, oil prices fell sharply, reflecting a mix of expected production and consumption, attitudes to risk and financing conditions. Bond yields in advanced economies continued to fall throughout much of the period under review and bond markets entered uncharted territory as nominal bond yields fell below zero in many markets. More…

III. When the financial becomes real

Plummeting oil prices and a surging US dollar shaped global activity in the year under review. These large changes in key markets caught economies at different stages of their business and financial cycles. The business cycle upswing in the advanced economies continued and growth returned to several of the crisis-hit economies in the euro area. At the same time, financial downswings are bottoming out in some of the economies hardest-hit by the Great Financial Crisis. But the resource misallocations stemming from the pre-crisis financial boom continue to hold back productivity growth. More…

IV. Another year of monetary policy accommodation

Monetary policy continued to be exceptionally accommodative, with many authorities easing or delaying tightening. For some central banks, the ultra-low policy rate environment was reinforced with large-scale asset purchase programmes. In the major advanced economies, central banks pursued significantly divergent policy trajectories, but all remained concerned about the dangers of inflation running well below inflation objectives. In most other economies, inflation rates deviated from targets, being surprisingly low for some and high for others. More…

V. The international monetary and financial system

The suitable design of international monetary and financial arrangements for the global economy is a long-standing issue. A key shortcoming of the existing system is that it tends to heighten the risk of financial imbalances, leading to booms and busts in credit and asset prices with serious macroeconomic consequences. These imbalances often occur simultaneously across countries, deriving strength from international spillovers of various types. The global use of the dollar and the euro allows monetary conditions to affect borrowers well beyond the respective issuing economies. More…

VI. Old and new risks in the financial landscape

Risks in the financial system have evolved against the backdrop of persistently low interest rates in advanced economies. Despite substantial efforts to strengthen their capital and liquidity positions, advanced economy banks still face market scepticism. As a result, they have lost some of their traditional funding advantage relative to potential customers. This adds to the challenges stemming from the gradual erosion of interest income and banks’ growing exposure to interest rate risk, which could weaken their resilience in the future. More…

The Bucket

Posted on July 2, 2015 by Editorial Staff -

Passive funds continue to dominate flows: Cerulli

ETF assets have grown for four consecutive months, ending May with more than $2.1 trillion, according to the June 2015 issue of The Cerulli Edge – U.S. Monthly Product Trends Edition.

At $13 billion, flows into the vehicle were positive but down slightly from April.

Mutual fund asset growth slowed to 0.2% during May after increasing more than 1% in April. Flows for the month were at $20.8 billion, with passive funds accounting for 64%.

New data tool lets asset managers track advisors

Broadridge Financial Solutions and Cogent Research, have introduced Advisor Intelligence, a tool that combines Broadridge’s fund and ETF data with Cogent’s advisor segmentation data to generate profiles of more than 250,000 advisors nationwide, the companies announced this week.

The tool “links three critical types of information not commonly available through a single source: product data, firm profiles, and attitudinal preferences—giving asset managers the ability to pinpoint their marketing and sales activities to support advisors,” according to a press release.

Advisor Intelligence enables “asset managers to understand what trades are occurring, where and how their products are being sold, and the communication preferences of advisors who are selling them,” the release said.

“Until now, approaches to advisor segmentation have tended to be quite broad in nature,” said John Meunier, managing director, Cogent Reports, a unit of Market Strategies International. “This partnership combines trading information in our behavior models to improve the predictability of key segments, to more efficiently build the bridge between asset managers and advisors.”

According to Broadridge and Cogent Reports data:

The RIA channel is the strongest user of ETFs, while the independent broker-dealer channel is the largest user of actively managed mutual funds.
76% of advisors are using ETFs, up from 68% two years ago.
Overall, ETF assets under management are up $167 billion year-to-date as of May 31.
New products such as “smart beta” ETFs are increasingly attractive to advisors, especially in the retail channels driven by advisors.
Advisors are increasingly brokering mutual fund sales for small and medium defined contribution plan business.

Transamerica in distribution partnership with Edward Jones

Transamerica has entered a partnership with Edward Jones to distribute corporate retirement plans to companies throughout the U.S., the San Francisco-based financial services company said this week.

Transamerica Retirement Solutions Corporation serves more than three million participants, and Edward Jones has nearly 14,000 financial advisors serving nearly seven million clients nationwide.

Introducing a new firm: Willis Towers Watson

In an $18 billion deal that signals the further consolidation of the pension consulting business, Towers Watson will merge with rival Willis to form a consultancy with 40,000 employees, the companies announced this week. Current Willis shareholders will own 50.1% of the new company—Willis Towers Watson—and Towers Watson 49.9%.

Towers Watson was formed in 2010 when Towers Perrin merged with Watson Wyatt.

Willis and Towers Watson plan to combine their current risk advisory and insurance-brokering services but also to eliminate redundancies and cut costs.

Towers Watson shareholders will receive 2.64 Willis shares in exchange for their stake, with an additional one-off dividend payment of $4.87 pre-closing. A similar deal will also be offered to Willis stakeholders. The final agreement will then see one share in Willis Towers Watson for each Towers Watson share.

John J. Haley, the Towers Watson chairman and CEO since 1999, will become chief executive of the new company. Willis chief executive Dominic Casserley will be named president and deputy chief executive. The deal should close by the end of 2015, subject to shareholder and regulatory approval.

New marketing chief at Prudential Annuities

Rodney Branch has been named senior vice president and Chief Marketing Officer for Prudential Annuities, the domestic annuity business for Prudential Financial, Inc. He will be responsible for Prudential Annuities’ marketing strategy and growth initiatives in the retirement income marketplace.

Prior to joining Prudential, Branch was vice president and lead for Nationwide Financial’s Annuity, Innovation and Competitive Intelligence Team, leading the variable and fixed annuity businesses. Earlier at Nationwide, he was vice president, Channel Marketing, with responsibility for marketing and sales support for all of Nationwide’s distribution channels from 2010 through 2012. He has also held marketing positions with Frito-Lay, Diageo and Branchout, L.P.

Branch holds an MBA in marketing from the University of North Carolina and a BBA in marketing from the University of Texas. Branch reports to Robert O’Donnell and is based in Shelton, Ct.

In New York, Hanging with Robos

Posted on June 25, 2015 by Kerry Pechter -

To glimpse of the future, I dropped by the InVest conference on “Innovations in investing, savings & advice” at the New York Hilton last week. It was a gathering of robo-advice entrepreneurs, the vulture capitalists who back them, and agile Wall Street firms who, as one speaker put it, are determined not to be the “next Kodak.”

In other words, this was robo central, aka fintech central, aka digital advisory channel central. Think “TED Talk,” and you’ll have a sense of the tone of the presentations. It wasn’t the biggest robo-advice conference so far this year—Joel Bruckenstein’s T3 conference in Dallas was bigger—but Manhattan is the better location.

And InVest wasn’t just about tech. These disrupters believe they own the future. They trust, with a confidence bordering on the brash, in their own brilliance. They know that the path to the wallets of the Millennial generation runs through them.

The most interesting thing I learned at InVest was that the robo-advisors and the Department of Labor are in synch, if not in cahoots. I was told that the DOL waited until this year to unveil its new anti-conflicts-of-interest proposal because the robo-advice has just recently matured to the point of offering a legitimate alternative to traditional advice models.

That may or may not be true, but the robos clearly like what the DOL is doing, and vice-versa (as evidenced by the Secretary of Labor’s positive reference to Wealthfront during a House subcommittee hearing last week). Both aim to make retirement advice less expensive through automation, more transparent through open-architecture, and more objective through access to comparative data. The Millennials feel empowered by the Internet. As one presenter said, Millennials expect to “tap twice for further information” in every sphere of their lives.

The moves by Fidelity, Vanguard, Schwab and Northwestern Mutual to build or buy or strengthen their digital advisory channel capabilities suggest that robo-advisors will complement, not replace, human advisers, and lead to a hybrid advice model that combines web portals and call centers. This was a recurring theme at the conference.

“A lot of vested players will want this capability,” said Sebastian Dovey, co-founder of Scorpio Partnership, “a global market research and strategy consultancy to the global wealth industry” based in London. “They’ll do hybrid solutions in order to avoid ceding market share to other institutions.”

In this scenario, fee-based advisers may not lose customers, but they will lose pricing power. “There won’t be a landslide of dollars coming out of the financial advisor world,” Dovey said. “But the price shift will be significant.” Competition from robo-advisors will drive registered investment adviser fees down by “30 to 35%,” he said.

One of the answers that I had hoped to find at the InVest conference involved retirement income: Can robo-advisors do it? It’s relatively easy to automate risk-based asset allocations and choose mutual funds. But can a robot design a custom income plan for retirees, given the huge differences in their circumstances?

I saw only one presentation that described a robo-solution for retirement income. NextCapital, a provider of advice to defined contribution plan participants, is partnering with Russell Investments, wholesale fund company. Together, they will distribute the Russell Adaptive Retirement Accounts custom TDF glide path technology to Next Capital’s DC customers (and, later this year, to the retail market).

Russell Adaptive Retirement Accounts doesn’t exactly produce a retirement income plan. As Russell’s Jeff Eng described it, Russell uses individual participant data—age, salary, current savings rate—to establish a retirement income goal and, from that, works backwards to derive a retirement savings goal. Having established the goal, the software can recommend a different asset allocation, different investments or a higher deferral rate and then calculate a personal funded ratio.

Is that the same as showing a client how to turn savings into income, by creating a custom combination of specific insurance and investment products that will mitigate the unique market, inflation, health and longevity risks that retirees face? I wasn’t convinced.

Another misconception from which robo-advisers may suffer is the idea that the main function of most investment advisers is to give investment advice. Most registered reps and insurance agents get paid to distribute investments and insurance products—i.e., gather liabilities—for mutual fund firms and insurance companies.

Will the robo-advisers (or hybrids thereof) be able to gather liabilities—an arguably much more difficult and important societal function, in the grand scheme of things, than calculating asset allocations and recommending funds for individual investors? If you know the answer, please send it to me.

Public comments on DOL are now available; hearing to start August 10

Posted on June 25, 2015 by Editorial Staff -

The first wave of public comments on the DOL conflicts-of-interest proposal and related matters are now available online and a public hearing on the controversial matter will be held on August 10, 11, 12 and, if necessary, August 13, 2015, according to an announcement in the Federal Register last week.

The hearing, held by the DOL’s Employee Benefits Security Administration, will start at 9 a.m. EDT on those days in the Cesar E. Chavez Memorial Auditorium at the U.S. Department of Labor, Frances Perkins Building, 200 Constitution Avenue NW, Washington, DC 20210.

The deadline for public comments on the proposed conflicts of interest rule and proposed exemptions from prohibited transactions has been extended to July 21, 2015. Requests to testify must be received by 5 p.m. EDT, July 24, 2015.

Requests to testify at the hearing can be sent by email (to [email protected], subject line: Conflict of Interest Rule Hearing), by mail (Office of Regulations and Interpretations, Employee Benefits Security Administration, Attn: Conflict of Interest Rule Hearing, Room N–5655, U.S. Department of Labor, 200 Constitution Avenue NW, Washington, DC 20210.

A portion of the hearing will focus on the Department’s Regulatory Impact Analysis, which addresses the effects of conflicts of interest in the market for retirement investment advice and the need for regulation, the anticipated economic effects of the proposal, and the relative merits of certain regulatory alternatives.

“MACS” are poised to lead an active-management comeback: Citi

Posted on June 25, 2015 by Editorial Staff -

Maybe active managers are just whistling past the graveyard, but lately they’ve been predicting that the investors will soon outgrow their infatuation with low-cost index funds and ETFs and fall back in love with higher-cost actively managed funds.

Sales of bespoke funds will rebound on the wings of new three-pronged “dynamically managed multi-asset class solutions” (MACS), according to Citi’s just published 6th Annual Industry Evolution Survey. The three elements are: an unconstrained long core, liquid alternatives, and Smart Beta tools that hedge specific risks.

“These offerings will be seen as building blocks to create bespoke solutions for institutions and packaged solutions for retail clientele,” the survey said, citing recent interviews with investment managers, investors and intermediaries representing AUM of about $30 trillion.

The report projects AUM in the publicly traded fund space to expand from $40.8 trillion in 2014 to $56.9 trillion by the end of 2019, based on compounded annual growth rate estimates. Citi predicted that strategies tied to market indices would decline to 76% from 84% of that pool. The financial services giant also predicted that sales of the new three-component active funds will grow to about $15 trillion by 2020.

“The industry is likely to become more active in the next five years as asset managers’ reassert their trading skills away from market indices,” says Sandy Kaul, Global Head of Business Advisory Services within Citi’s Investor Sales unit.

“We see active long-only managers moving to strategies that will run between 80% and 120% net long, with this asset pool projected to grow from an estimated $6.8 trillion in 2014 to $14.9 trillion in the coming five years,” she said.

Unconstrained long strategies will eclipse passive benchmark fund growth to become the second largest asset pool in the publicly traded fund space by 2019, Citi’s survey suggested. Passive benchmark AUM (across separately managed accounts, mutual funds and ETFs) is seen rising from an estimated $6.7 trillion in 2014 to $10.7 trillion by the end of 2019. Actively managed long-only benchmark funds will continue as the largest asset pool, but is predicted to lose market share.

By the end of 2019, AUM in Smart Beta and actively managed ETF products is projected to nearly quadruple to $1.1 trillion, liquid alternative AUM is seen as more than doubling to $1.7 trillion, and privately offered funds (hedge funds, private debt and financing and private equity products) are expected to grow from $7.1 trillion to $10.0 trillion, according to Citi’s projections.

The full report, along with other industry analysis and reporting can be viewed at: Citi Sixth Annual Industry Evolution Survey June 2015.

SEC and FINRA publish study of sales to seniors at BDs

Posted on June 25, 2015 by Editorial Staff -

A review of broker-dealer sales practices with regard to senior investors 65 years old or older, along with recommendations to improve those practices, has just been published by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

The review, “National Senior Investor Initiative: A Coordinated Series of Examinations,” noted that, because safe investments offer historically slim yields, senior investors are especially vulnerable to recommendations to buy inappropriate products that appear to fulfill their need for steady income.

The examinations itself was conducted in 2013 by FINRA and the SEC’s Office of Compliance Inspections and Examinations, and involved inquiries at 44 broker-dealers as well as meetings with the Consumer Financial Protection Bureau; the AARP Education and Outreach Group; and state regulators from Florida, Colorado, California, Texas, and North Carolina.

The 44 examinations focused on:

The types of securities being sold to senior investors
Training of firm representatives with regard to senior specific issues
How firms address issues relating to aging (e.g., diminished capacity and elder financial abuse or exploitation)
Use of senior designations
Firms’ marketing and communications to senior investors
Types of customer account information required to open accounts for senior investors
Suitability of securities sold to senior investors
Disclosures provided to senior investors
Complaints filed by senior investors and the ways firms tracked those complaints
Supervision of registered representatives as they interact with senior investors

The reviews identified the products listed below as among the top five revenue-generating securities at the examined firms based on sales to senior investors (along with the approximate percentages of broker-dealers where the products were among the five most commonly sold to senior investors):

Open-end mutual funds (77%)
Variable annuities (68%)
Equities (66%)
Fixed income investments (25%)
Universal investment trusts and exchange-traded funds (20%)
Non-traded real estate investment trusts (20%)
Alternative investments such as options, business development companies, leveraged inverse ETFs (15%)
Structured products (11%)

With respect to variable annuities, the SEC and FINRA found evidence of potentially unsuitable sales to seniors at 34% of the 44 broker-dealers they examined. The report cited the possible unsuitability of recommendations to exchange existing variable annuities for new ones, to put a large percentage of a client’s net worth in a variable annuity, or to buy products inappropriate to clients’ ages and investment time horizons.

The Bucket

Posted on June 25, 2015 by Editorial Staff -

Millennials ‘defy stereotypes’: T. Rowe Price

“Millennials,” ages 18 to 35 or so, now represent about a third of the U.S. population. Partly because they now have economic clout, and are starting to save for retirement—and partly because they’re America’s first truly digital cohort—the financial services industry is keen to understand them.

That’s why we’re seeing more studies that compare and contrast the financial habits of the Milllennials and their parents, the Baby Boomers. T. Rowe Price, the no-load mutual fund company and retirement plan provider, for instance, has just issued a survey of 1,505 Millennials and 514 Boomers called the “Retirement Saving and Spending Study.”

“Millennials with 401(k)s have relatively good financial habits, particularly when compared with a national sample of 514 baby boomers with 401(k)s,” a release about the new report said. “While Millennials are not saving at least 15% of their annual salary for retirement, as T. Rowe Price recommends, they recognize that saving for retirement is important and are interested in saving more.”

Millennials, according to their own testimony, tend to track their expenses more than Boomers do (75% vs. 64%), are more likely to stick to a budget (67% to 55%), and were more likely to have increased their retirement savings within the past 12 months (40% vs. 21%), the T. Rowe Price survey showed. Millennials ranked contributing to a 401(k) but below the match and paying down debt equally as their top priority.

“They are exhibiting financial discipline in managing their spending and are defying stereotypes that this generation is prone to spend-thrift, short-sighted thinking,” said Anne Coveney, senior manager of Retirement Thought Leadership at T. Rowe Price.

In other survey findings:

Millennials are saving nearly as high a percentage of salary as baby boomers.
More millennials have increased their 401(k) savings this year than baby boomers.
More Millennials wish their employers auto-enrolled them in 401(k)s at a higher savings rate.
Millennials want advice and are more likely to use robo-advisors.
They fund emergencies differently.

Millennials profess to live within their means and to save by any means necessary.
They are more comfortable saving extra money than spending it.
Their employers’ 401(k) matches largely drive saving behavior.
Most are better off financially than their parents were at the same age.
Saving for retirement and paying down debt are equally important.
Most Millennials expect Social Security to go bankrupt before they retire.

Millennials are satisfied with auto-enrollment.
Auto-enrollment rates can be set higher.
Millennials want their employers’ full contribution match.
But some are reluctant to save at higher rates.

Millennials understand that target date funds hold a mix of asset classes.
But they may not have a full appreciation of all risks.
And they do not understand that these funds offer one-stop diversification.

Women are less likely to save in 401(k)s.
And when they do save, they save less than men.
Non-savers make less money and have more student debt.
Their educational attainment is the same as those who are saving.
It is difficult for non-savers to meet their monthly expenses.

The T. Rowe Price research was based on online interviews with 3,026 working adults age 18+ who are currently contributing to a 401(k) plan or are eligible to contribute and have a balance with their current employer of $1,000 or more. Additionally, 255 Millennials (ages 18–33) who are eligible for a 401(k) at their current employer but not contributing and do not have a balance in that 401(k) were surveyed. Retirees are represented by 1,027 adults who have retired in the past one to five years and who have a Rollover IRA or an account balance in a left-in-plan 401(k) plan. Interviewing was conducted during February 19 through March 25, 2015. All three samples are subject to a margin of error of just under 3%.

Interest rates will stay low for years: PIMCO

Institutional investors are likely to continue to have to search for alternatives to traditional bonds in the years to come, according to the results of PIMCO’s latest Secular meeting on the long-term economic outlook, held each May, IPE.com reported.

PIMCO’s analysts predicted that the neutral, real base rate for government bonds in developed countries would hover around 0% over the next 3-5 years, once central banks found the “right level” to balance out investments and savings.

“We have probably seen the bottom of the trough regarding interest rates in Europe now,” said Andrew Bosomworth, managing director, PIMCO Germany.

PIMCO’s analysts estimated that basic yield would only be increased by an inflation premium, most likely the 2% set by the European Central Bank as target inflation, and a duration premium of 0.5-1% for 10-year-bonds on average.

Nevertheless, Joachim Fels, managing director and global economic advisor at PIMCO, said he did not anticipate a “great rotation” from bonds into equities, predicted by many in the current low-interest-rate environment. “Some investors shifted a part of their portfolios into equities, but volatility remains a problem for many,” he said.

Bosomworth added that not all companies could “get money on the stock markets”, while governments had to continue to issue bonds. He pointed out that, even with low interest rates, there was still demand for government debt because of its safety.

Schwab introduces RIA version of its Intelligent Portfolios program

Charles Schwab has launched an automated investment management platform for registered investment advisors. Called Institutional Intelligent Portfolios and sponsored by Schwab Wealth Investment Advisory, Inc., it’s a white-label web-based platform that allows individual RIAs to leverage some of the digital capabilities that the robo-advisors have created.

“Institutional Intelligent Portfolios offers RIA firms flexibility across portfolio construction, ETF selection, and branding for their client experience,” a Schwab release said. RIAs can use the platform to build portfolios from more than 450 exchange-traded fund in 28 asset classes from all major fund families.

Once advisory clients establish accounts on the Schwab platform, the accounts can be automatically enrolled, with the advisor’s client’s agreement, for electronic delivery of trade confirmations, statements, communications and other documents, and advisors’ clients can access their account using Schwab Alliance or through a dedicated website and mobile app, Schwab’s release said.

Institutional Intelligent Portfolios accounts will be displayed in Schwab Advisor Center (Schwab’s desktop client management system for RIAs), alongside the advisor’s other client accounts. Data on Institutional Intelligent Portfolios accounts will be available for download through Schwab Data Delivery to use in advisors’ portfolio management systems, including those offered through Schwab Performance Technologies such as PortfolioCenter, Schwab’s portfolio management tool for advisors. Users of Schwab OpenView Gateway also will be able to access real-time information on these accounts through all participating third-party applications.

The program’s pricing structure is based on total assets custodied with Schwab outside of the Institutional Intelligent Portfolios program. For advisors with less than $100 million in assets under management (AUM) with Schwab, there will be a 10 basis point platform fee. For those firms who maintain more than $100 million in AUM at Schwab, there will be no fee. Schwab charges no account service fees, trading commissions or custody fees to advisors’ clients.

Today’s target-date funds are outdated: AllianceBernstein

AllianceBernstein, the investment management firm that is 62.7% owned by AXA, has released a whitepaper called “Designing the Future of Target-Date Funds: A New Blueprint for Improving Retirement Outcomes.”

“Today’s target-date funds fail to incorporate institutional-quality investment solutions and fiduciary best practices that are commonplace across most large, professionally managed portfolios,” AllianceBernstein said in a release. “Despite the new tools available to target-date funds, most retirement plans are still using traditional portfolio designs developed years ago.”

Many target-date strategies use a single-manager approach, focus only on stocks and bonds, have a limited static allocation strategy, and stick entirely with active or passive investing approaches rather than mixing the best of both, the whitepaper says.

“We’re looking to provide a target-date design of tomorrow that utilizes a multi-manager, open architecture structure, incorporates a broader collection of diversifying assets and that can dynamically adjust the glide path according to market conditions,” said Dan Loewy, chief investment officer and co-head of multi-asset solutions at AllianceBernstein, in the release.

Bank of America Merrill Lynch to sponsor RIIA webinars

The Retirement Income Industry Association has announced that Bank of America Merrill Lynch will underwrite the organization’s 2015-2016 calendar of adviser- and retirement industry-focused webinars as sole sponsor of its Virtual Learning Center.

The twice monthly webinars, offered free to the retirement industry, press and advisers, provide perspective from industry thought leaders on retirement income planning challenges, strategies, products and technologies. This is the third year that Bank of America Merrill Lynch has supported the Virtual Learning Center. Access to past webinars is available to RIIA corporate and individual members.

Launched in 2011, RIIA’s Virtual Learning Center (VLC) has been host to presentations from industry leaders including: Michael Kitces, Wade Pfau, Michael Finke, David Blanchett, Dirk Cotton, Jack Tatar, Dana Anspach, Sandra Timmermann, Mathew Greenwald, Howard Schneider, Dennis Gallant, Anna Rappaport, Milliman, New York Life Insurance Company, MassMutual, PwC, The Depository Trust & Clearing Corporation, and DST Systems, among others.

The Retirement Income Industry Association (RIIA) is a not-for-profit industry association that was started in 2005 and launched publicly in February 2006 “to discover, validate and teach the new realities of retirement and to do so from the perspective of “The View Across the Silos”, with the goal of achieving better retirement outcomes.”

More information about RIIA can be found at www.riia-usa.org.

Fidelity’s biennial “couples” study published

Most couples (72%) say they communicate “exceptionally” or “very” well about money, 43% (up from 27% in 2013) couldn’t correctly identify how much their partner makes, and 10% of those were off by $25,000 or more, according to Fidelity Investments’ 2015 Couples Retirement Study.

The biennial survey, which has been conducted since 2007, identified a number of other critical misunderstandings and knowledge gaps between couples:

36% of couples disagreed on the amount of the household’s investible assets.
48% have “no idea” how much they will need to save to maintain their current lifestyle in retirement—and 47% percent are in disagreement about the amount needed.
60% of couples and 49% of Boomers don’t know how much their Social Security benefit might be.
One in three couples disagree about how comfortable their retirement lifestyle will be.

MassMutual’s PlanALYTICS program boosts DC contributions

Prudential Retirement retains $9.1bn public pension client

To economize, pensions of Dutch financial firms may merge

British official becomes BlackRock’s U.K. retirement strategist

Cetera picks Broadridge as mobile platform provider

Four myths about marketing to RIAs

New York Life and John Hancock complete $25 billion reinsurance deal

Prudential sponsors webcasts aimed at African-American investors

Big Dutch pension funds receive SIFI-like designations

Broker/dealers to pay $30 million in restitution

Passive funds continue to dominate flows: Cerulli

New data tool lets asset managers track advisors

Transamerica in distribution partnership with Edward Jones

New marketing chief at Prudential Annuities

Millennials ‘defy stereotypes’: T. Rowe Price

Interest rates will stay low for years: PIMCO

Schwab introduces RIA version of its Intelligent Portfolios program

Today’s target-date funds are outdated: AllianceBernstein

Bank of America Merrill Lynch to sponsor RIIA webinars

Fidelity’s biennial “couples” study published

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