401(k) Participant Transfer Activity Slowed in December

The volume of 401(k) participant transfer activity was below average for December, according to the Aon Hewitt 401(k) Index.

In December, the daily average of total defined contribution plan balances transferred was just 0.027%, compared to a daily average of 0.035% of total balances over the past 12 months. Only two days in December saw trading volume exceed the trailing 12-month daily average.  

While the markets were mixed, the direction of transfers and total assets moved heavily favored fixed income investments (including bonds, stable value and money market), as 71% of the days experienced net fixed income transfers, and only 29% of days had a net flow towards equities. This amounts to $218 million transferring out of diversified equities (equities excluding company stock), which is high considering the low volume of transfer activity for December.   

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All equity-based asset classes had net outflows during December. Even though Large U.S. Equity stocks had a strong rally for the month, this asset class saw the largest net outflow, at $78 million. International funds and Small U.S. Equity also experienced significant outflows of $63 million and $44 million transferring out, respectively.  

Fixed income asset classes all experienced gains for the month. Bond funds had $169 million of inflows from transfer activity, which was by far the largest movement. GIC/Stable Value also saw $47 million transferred in, and Money Market flows were $9 million.  

Participants’ discretionary contributions, a gauge of sentiment, also moved away from equities, with the overall allocation directed to stock funds down from 60.8% in November to 59.7% in December.  

Fixed income asset classes now hold 41.7% of total assets, with 58.3% in equities. This is explained by the transfer activity flowing toward fixed income assets since the market indices show a mix of gains and losses that translate to a negligible effect on asset allocation, Aon Hewitt said.  

More data is available at http://www.aon.com/human-capital-consulting/thought-leadership/outsourcing/401k_index/401k_index_2011_dec.jsp.

Alliance Acquires Brown Edwards

Alliance Benefit Group Carolinas Inc., a subsidiary of Pentegra Services Inc., is acquiring Brown Edwards & Associates Ltd.’s qualified plan administration business. 

Alliance Benefit Group-Pentegra will administer these plans. The transition will be completed over the next several months.

The transaction will increase the services available to Brown Edwards & Associates’ clients and adviser partners. Clients will have access to a full array of retirement plan services, including custom plan design; ongoing plan consulting; daily valuation administration and recordkeeping; flexible, fully customizable open-architecture arrangements; legal and technical support; plan compliance and fiduciary services; education and communications; and sponsor and participant 24/7 web access.

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Brown Edwards & Associates will continue its presence in the Charleston, South Carolina area.

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