The Markets October 27, 2010

SI Report Describes Future Fund Distribution Landscape

A new study of global fund distribution features by Strategic Insight (SI) says the future holds a reduced number of blockbuster funds in a more guided architecture context.
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SI, an Asset International company, says current flows will go to simple and thematic funds, even though selected “Newcits” funds are picking up net flows and CEOs expect absolute return and investment solutions to dominate the future landscape.

According to the study, information needs and marketing campaigns are changing rapidly with brand, how it is holistically presented to the public, and specific client segments seen as paramount.  “While distributors still love a good story, they are demanding more independent research and thought leadership instead of a sales pitch,” the report said.

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On average over the coming decade, small- and medium-sized firms are ready to go after new clients and geographies, while large firms are, for the time being, focused on damage control and client service in their domestic markets.

Companies that are able to effectively communicate both product details as well as what their firm stands for, are successful, but finding the right communicators is challenging and a war for talent is developing, SI said. Client service and the quality of (multiple) relationships are the line of demarcation between a blockbuster and being blacklisted.  As distributors reduce the number of firms they work with, they demand more customized support and tailored information.

The report is based on 1,000 interviews with fund and wealth management executives over two years.

Products October 27, 2010

Diversified Offers In-Plan Retirement Income Solution

Diversified Investment Advisors has a new in-plan investment option that guarantees income for life, while allowing retirement plan participants to participate in the stock and bond markets and maintain control over their retirement money.
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Designed for defined contribution plan participants age 50 or over, SecurePath for Life is built around a series of index-based target date funds from the Vanguard Group.   

According to a press release, key features of SecurePath for Life include: 

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  • Guaranteed lifetime income beginning at or after age 55 which will equal a percentage of the participant’s income base; 
  • A special annual “step-up” feature that can enhance the participant’s guaranteed income as a result of market gains;  
  • Underlying target-date funds which are managed by the Vanguard Group; 
  • Flexibility to transfer money in or out of the option to other options in the plan as desired (transferring money out of SecurePath for Life could reduce or eliminate the guaranteed income amount); and 
  • Death benefits that allow participants to pass value on to their heirs. 

“By bringing together the best features of traditional annuities and today’s popular target-date funds in the form of an option that can be seamlessly integrated into a plan sponsor’s existing defined contribution plan, SecurePath for Life addresses many important aspects of retirement planning,” said Gerry Katz, senior vice president of Diversified, in the announcement.

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