Data & Research May 18, 2011

Automated Programs Lead to Improved 401(k) Results

Bank of America Merrill Lynch’s Retirement & Benefit Plan Services quarterly report on plan participant contribution activities found many plan sponsors are using a combination of automated and advice features.
Reported by

As of March 31, 2011, 12% of plans within BofA Merrill Lynch’s proprietary 401(k) business were utilizing Auto Enrollment and Advice Access, 10% of plans utilize both Auto Enrollment and Auto Increase, and 7% of plans utilize Auto Enrollment, Auto Increase and Advice Access. Its analysis found plans that incorporate multiple features or services designed to encourage positive plan participant behaviors show significantly greater results.  

The average participation rate for plans that don’t use any of the services is 48%, compared to an average participation rate of 64% for plans that incorporate any two services and 76% for plans that include all three.  

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Year-over-year, BofA Merrill Lynch has seen a 12% increase in the use of Auto Enrollment, with more than 260 plans live with this feature; a 23% increase in the use of Auto Increase, with more than 140 plans now live; a 26% increase in plan usage of Advice Access, with more than 420 plans now live with this service. The analysis also found a 22% increase in participants utilizing Advice Access since March 2010.   

Other findings from the 401(k) Contribution Activities Quarterly Scorecard include:

  • Nearly 291,000 employees took a positive savings action in their 401(k) plan accounts in Q1 2011, compared to approximately 202,000 in Q1 2010.
  • Among all participants who took some type of savings action during Q1 2011, 75% took a positive action (started or increased contributions), versus 25% who took a negative action (stopped or decreased contributions) – compared to 66% and 34% during Q1 2010, respectively.
  • The percentage of plan participants who increased their contribution rate in Q1 2011 was 3 percentage points higher than those who took this action in Q1 2010, while the percentage of participants who started contributing was nearly 6 percentage points higher for the same period. 
The Markets May 17, 2011

U.S. Stock ETFs Bounce Back in April

Inflows for U.S. exchange-traded funds (ETFs) accelerated to $23.3 billion in April after reaching just $6.9 billion in March.
Reported by

U.S. stock ETFs, which lost more than $3.3 billion to outflows in March, bounced back in April with inflows of $10.2 billion, according to data from Morningstar. Among the stylebox categories, only small-value offerings saw outflows, totaling $223 million.   

Investors added $7.1 billion during the month to international-stock ETFs after contributing $6.7 billion in March.   

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Following March outflows of $218 million, commodities ETFs saw inflows of approximately $821 million in April with the majority of these inflows directed to physically-backed gold offerings.   

Taxable-bond ETFs collected $3.6 billion in new assets in April, and the municipal-bond ETF asset class, with about $98 million, had its strongest monthly inflow since October.  

The Morningstar report is at http://www.global.morningstar.com/aprilflows11.

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