Deals & People November 8, 2013

BofA to Move $19B DC Plan In-house

Bank of America is moving its $19 billion defined contribution (DC) plan, currently with Fidelity, to the Merrill Lynch platform.
Reported by

Beginning in 2015, the Bank of America Merrill Lynch Retirement Plan and Services Group will serve as administrator for the bank’s 401(k) plan, a spokesman for Bank of America told PLANADVISER. The move is part of the company’s strategy over the past five years, to connect financial benefit plans within a single platform, the spokesman said.

Since Bank of America agreed to buy the brokerage in 2008, the bank has migrated other financial plans to the Merrill Lynch platform. When Merrill joined, its platform continued to administer the legacy 401(k) platform as well as the legacy defined benefit (DB) plan. In 2009 Bank of America moved its health savings and health flexible spending accounts to Merrill Lynch’s platform, and in 2011 Merrill Lynch took over the long-term equity award plan.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

Similar to Bank of America, many other financial services firms—among them JP Morgan Chase, Wells Fargo, New York Life Insurance, TIAA-CREF, Prudential Financial and Fidelity—act as both fiduciary and administrator of a retirement plan. No changes in the fund lineup are slated at this time.

Fidelity will continue administering the Bank of America pension (DB) plan, covering more than 440,000 employees and retirees, as well as its Legacy Transferred Savings Account (TSA) DC plan, with 20,000 participants.  Bank of America also is expanding its DB relationship with Fidelity with the transition of legacy Countrywide pension plan participants into their DB plan at Fidelity, a spokeswoman from Fidelity told PLANADVISER.

 “Our defined benefit and TSA plans [transferred savings account, a type of DC plan] are frozen,” the spokesman said. “And thus we decided to consolidate and service these inactive plans with one provider, in this case, Fidelity, who was already overseeing them.”

Bank of America serves 15 plans with assets of more than $1 billion, according to the spokesman, so the move fits the company’s large- and mega-market plan business. Over the past 18 months they have added 10,000 retirement plans (DB, DC, deferred compensation, equity award). “Merrill Lynch has been very present in this space and has an active client base,” the spokesman said. A dedicated team that serves mega plans is aligned to the company’s plan transition and will provide ongoing servicing.

Products November 8, 2013

FlexShares Launches Real Estate Index Fund

FlexShares has launched its Global Quality Real Estate Index Fund.
Reported by

The fund attempts to outperform traditional real estate indices via global exposure to listed, non-mortgage real estate investment trusts and operating companies that emphasize stable, long-term capital growth at an attractive price.

The fund employs Northern Trust Corporation’s Quality Score, a proprietary quantitative methodology that uses fundamental data to evaluate the strength of a company’s financial health and growth prospects. The Quality Score index, similar to the methodology used in FlexShares’ Quality Dividend product suite, incorporates factors of management efficiency, profitability and cash flow.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

The aim of the fund is to outperform legacy real estate indices in upward and downward trending markets, during central bank tightening and easing cycles. It uses a combination of current and historical valuation metrics.

“Research shows that a high quality, value-focused portfolio of real estate securities may offer attractive returns with less volatility compared to traditional capitalization-weighted global real estate indices,” says Shundrawn Thomas, head of Northern Trust’s FlexShares Exchange Traded Funds Group. “This fund provides investors a disciplined approach for investing in global real estate equities.”

«