Products September 16, 2011

MSSB Develops Retirement Eligibility Tracking System

Morgan Stanley Smith Barney is offering a new service to help corporate clients track retirement eligibility dates and collect employment taxes from employees who receive restricted stock units (RSUs) as part of their equity compensation.
Reported by

MSSB’s Total Administration system for global stock plans stores employees’ eligibility dates and the amount of shares subject to employment taxes. Based on this data and the participant’s tax information, MSSB will calculate the Social Security and Medicare taxes due and show a statement of the information on the participant’s online account.  

In certain cases, employees who receive RSUs could face unexpected tax consequences when they hit their employer’s “retirement eligible” date. If the risk of forfeiture on RSUs is eliminated on that date, the RSUs are considered vested, potentially triggering Medicare and Social Security taxes. As a result, employers must track individual retirement eligibility dates for participants with restricted stock units and collect taxes when due.   

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The Markets September 16, 2011

Demand for Sub-Advised Mutual Funds Expected to Increase

In spite of market volatility, Financial Research Corporation (FRC) expects demand for sub-advised mutual funds to rise and assets to reach $2.2 trillion by 2016, according to industry data.
Reported by

This number represents an 11% compound annual growth rate (CAGR) from 2011 through 2016.  

FRC says sub-advised mutual funds seem to have reached market maturity in percentage of assets that are sub-advised. But there is more growth on the way for sub-advised variable annuities (VA) as they take more share of the industry.   

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Demand for external managers, as measured by mandate changes, was high in 2010 and has declined as expected in 2011, particularly in the VA marketplace. FRC expects further declines in manager changes over the next year if the market remains volatile.   

Sub-advisers will continue to face an opaque market when it comes to finding opportunity, but smaller firms should not feel disadvantaged, FRC said. The playing field seems more level than previously thought.   

Late 2011 and 2012 will bring increased competition for fewer mandates, performance pressure escalation, and broader stock market challenges.   

FRC’s recent report Winning in the Sub-Advisory Business reveals that sub-adviser firms polled say their primary source of manager search information is the manager itself (see “Report Reveals Sources for Sub-Adviser Opportunities“).  

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