The Markets July 8, 2009

2008 Toll: $10T Less in Managed Assets

The economic crisis erased just under $10 trillion in professionally managed assets in 2008, with the bulk of the decline seen in the final quarter, according to Cerulli Associates.
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A Cerulli news release said that while it took three years to add $10 trillion in assets between 2005 and 2007, it took less than six months to lose most of that money. Cerulli said it could take the better part of the next five years to regain those assets.

“As with all these things, there is a real danger of getting too bearish in one’s sentiment, but it wouldn’t be out of place to suggest that several of the old shibboleths of the asset management industry have been washed away,” said Shiv Taneja, managing director at Cerulli, in the news release.

“Even if the emerging markets see a more immediate recovery than the more developed markets, the one lesson that the global asset management industry has learned is that unless all is well at the home office, opportunistic and strategic expansion in far-flung markets can, and will, suffer,” Cerulli said, in the announcement.

The firm said it has revised downward its five-year growth forecasts from 7.9% to 5.5%. This suggests that global assets under management will grow to $56.5 trillion by the end of 2013, marginally higher than the $53 trillion at the end of 2007.

Products July 8, 2009

CCP Offers Retirement Security to Law Firms

Corporate Compensation Plans Inc. (CCP) has launched a Retirement Security program to protect retirement benefits in the 401(k), profit sharing, and defined benefit pension plans of law firm partners.
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A news release said CCP has designed an insurance program with two components:

  • a special disability insurance plan that continues partners’ contributions, up to $150,000 a year, when they become disabled so retirement assets grow just as if they had continued working. This component can be designed to pay benefits into the partners’ qualified plan accounts, into separate nonqualified trust accounts, or to the disabled partner to be invested.
  • a long term care insurance plan that protects partners’ qualified plan assets and income against the high costs of extended health care. A portion, or all, of the premium can be tax deductible, with some states offering tax credits. The policies can include a premium refund feature that guarantees premiums won’t be wasted if long-term care is never needed.

In addition, both components can be offered to the firm’s staff and attorneys.

“It is not uncommon to see partners deferring in excess of $100,000 a year into these plans,” said Philip Davis, president of CCP,in the news release. “As a result it is critically important that they eliminate risks that can cause the loss of their contributions and their plan assets.”

CCP has identified the most serious of these risks facing partners’ nest eggs to be pre-retirement disability and the costs of extended health care, the news release said.

The company recently launched a similar plan for physicians (see “Plan Protects Retirement Savings of Disabled Physicians“) and one to protect nonqualifed deferred compensation plan benefits (see “New Program Designed to Protect NQDC Benefits“).

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