Products December 8, 2016

NARPP Adding to Universal Retirement Plan Offerings

The non-profit is launching Icon next year, which employers can use to help employees save for retirement.
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Just as states are jumping in to fill the retirement plan coverage gap, a non-profit organization has announced the launch of a universal retirement plan.

The National Association of Retirement Plan Participants (NARPP) will launch Icon in 2017, a universal retirement plan designed to help the 75 million working Americans who do not have access to an employer-sponsored retirement plan. Icon integrates the best aspects of large employer-sponsored plans—such as low fees and simplified choices—along with complete portability and a well-designed user interface, the firm says.

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NARPP has been working with some of the most respected industry experts, behavioral finance academics and designers to develop the first offering on the Icon platform—a “Smarter IRA” that will voluntarily default people into a target-date fund (TDF) that is based on the saver’s age. NARPP has negotiated with asset managers to provide institutional pricing, which means people using Icon will pay significantly less than average retail fees on an IRA.

NARPP offers behaviorally effective communications that lead to increased levels of trust, deeper engagement and increased savings rates. Icon is a sustainable and scalable offering that makes it easier to save more, making it more likely that people will be better prepared for retirement.

Icon has been designed for independent contractors and ‘gig workers,’ people who work for an employer that doesn’t offer a plan, as well as employers who don’t offer a plan but want to help their employees save for retirement. With a five-dollar per month membership fee, people will have access to an experience that provides enhanced features such as personalized information, curated and unbiased financial information, a community of mentors and peers, live education events, and access to Icon. The membership fee can be paid by the individual or by employers on behalf of their employees.

“Icon represents a new model—it is the first fully comprehensive retirement savings system,” according to Warren Cormier of NARPP. “Icon encompasses all major components of a successful retirement journey—accumulation, portability, quality and transparency, along with fairly priced funds and behaviorally effective communications that motivate people to save.”

More about NARPP can be found at www.NARPP.org.

The Markets December 8, 2016

More ETF Strategies Embraced by Institutional Investors, Advisers

Investors are looking for more options when it comes to exchange-traded funds (ETFs), a survey finds.
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Institutional investors’ and advisers’ usage of exchange-traded funds (ETFs) continues to evolve and the products are becoming a cornerstone of their portfolios, suggests a study by Brown Brothers Harriman (BBH) and ETF.com.

The 2016 US ETF Investor Survey found one-third hold at least 11 ETFs in their portfolios. For the second year in a row, the largest number of respondents have six to 10 ETFs in their portfolios.

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Ninety-seven percent of investors plan to maintain or add to their smart-beta positions next year. Minimum volatility (44%) and quality strategies (42%) are top priorities when selecting a smart-beta ETF.

Investors are looking for more options when it comes to ETFs with international fixed income and commodity exposure. For the third year in a row, more investors are looking for fixed income in actively-managed ETFs, the survey found. Sixty-seven percent of respondents stated that liquidity is an important concern for fixed income ETFs. In addition, nearly two-thirds of ETF investors would consider an ETF engaging in securities lending.

“Investors are finding new avenues to use ETFs, and they want more options for active ETF, smart beta and fixed income products,” says Shawn McNinch, Global Head of ETF Services at BBH. “This year’s survey demonstrated that investors are gaining comfort in employing factor based strategies through smart-beta ETFs and using these products to position their portfolios against volatility and uncertainty, often by reducing allocations to active and even traditional cap-weighted strategies.” 

Thirty-seven percent of respondents stated that environmental, social and governance (ESG) factors are important when selecting an ETF.

The survey also found 75% of investors are comfortable buying an active ETF with a track record of three years or less, and almost two out of three are comfortable with buying new passive ETFs in the first year.

“Investors’ outlook on ETFs suggests more willingness to use strategies with shorter track records, both for passive and active funds.  For ETF issuers, these results support an increase in ETF product development and a focus on clearly defined distribution strategies in a competitive market,” says McNinch.

The 2016 survey polled 175 financial advisers and institutional investors. The full study report may be downloaded from www.bbh.com/etfsurvey.

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