Products October 19, 2010

Securian Helps Sponsors Decide if They Need Fiduciary Help

A new article from Securian will help plan sponsors decide if they need help with investment decisions.
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In a press release, Securian points out that some employers are fine with making the selection of retirement plan investment options themselves because they have in-house investment expertise. Others have some knowledge, but not enough to make the investment selections without some advice from an expert. A third group prefers to delegate that responsibility completely.  

In the article, “Choosing the right level of investment liability: 5 questions for plan sponsors,” Kirk Paulsen, senior associate actuary, Securian Retirement, describes the three fiduciary roles available to plan sponsors under sections 3(21) and 3(38) of ERISA (Employee Retirement Income Security Act). In general, the plan sponsor holds complete fiduciary responsibility for retirement plan investment selection; however under a properly structured ERISA section 3(38) program, the employer’s fiduciary responsibility extends only to the selection of an investment manager, according to the press release.  

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In the paper, Paulsen offers five criteria employers can use to determine the level of investment fiduciary liability to keep or transfer: 

  • Do conflicts of interest exist? It’s a conflict of interest when a fund company requires employers to select a pre-defined group of investments rather than single options that best fit that company’s plan. 
  • What’s my investment knowledge? Does the plan sponsor have enough in-house expertise to handle investment selection and the liability that accompanies it? 
  • What’s my preferred level of involvement? In other words, how much time do I want to spend analyzing, comparing, and selecting retirement plan investments? An employer that does not want to divert senior management from core responsibilities may decide to hire an expert. 
  • What’s my liability comfort level? As plan fiduciary, the employer is responsible for all investment selection discussions and outcomes. The least risky option is to transfer those responsibilities to an investment manager under a properly structured section 3(38) arrangement. 
  • What’s my price point? The more outside expertise a company uses to manage the retirement plan, the more it’s going to cost. However, the risk reduction may be worth it.
Data & Research October 19, 2010

"Sandwich Generation" Likely to Seek Financial Advice

New findings from MetLife’s 8th Annual Employee Benefits Trends Study show members of the working sandwich generation - those who are holding down a full-time job while raising children and caring for older relatives - are more likely to look for financial information and advice.
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About one in five full-time employees is a caregiver of an older relative and nearly three-quarters of these employees also have children under the age of 18. Nearly two-thirds (64%) of members of the sandwich generation employees say they live paycheck to paycheck, compared to 42% of employees with minor children and without the responsibilities of older relatives as well.  

According to a press release, only 5% of sandwich generation respondents say they don’t consult with anyone about their personal finances, compared to 30% of non-caregiving employees with children. And sandwich generation employees are turning to multiple resources including financial advisers (45%, compared to 24% without elder caregiving responsibilities), friends and relatives (39% vs. 17%), insurance agents (39% vs. 7%), accountants (32% vs. 9%), human resources department (26% vs. 10%), and financial publications and Web sites (23% vs. 13%).  

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Other survey findings included: 

  • Seven out of 10 working caregivers with minor children reported they are very concerned about their own long-term care needs in retirement, contrasted to four out of 10 non-caregiving employees with children; 
  • 37% of working men and women with minor children are very concerned about being able to afford to buy a home, but that percentage doubles to 74% for those who are also caregivers; 
  • 55% of workers with minor children are very concerned about affording college, but that percentage climbs to 72% for those who are also caregivers; 
  • While 45% of working parents are very concerned about having more time to spend with their families, that percentage jumps to 72% for those who are simultaneously balancing parental and elder caregiving responsibilities. 

The 8th Annual MetLife Study of Employee Benefits Trends was conducted during the fourth quarter of 2009 and fielded by GfK Custom Research North America. The employee sample comprised 1,305 interviews with full-time employees age 21 and over, at companies with a minimum of two employees. 

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