Products April 7, 2016

Investment Product and Service Launches

LMCG Investments adds to small-cap offerings; Voya Financial expands access to its target-date mutual fund series; Fringe Benefits Design partners with Redhawk Wealth Advisors for ERISA fiduciary services. 
Reported by

LMCG Launches Small Cap Fund

LMCG Investments announced the launch of the LMCG International Small Cap Fund.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

According to the firm, the fund allows financial advisers and investors to access LMCG’s international small cap strategy through a no-load mutual fund.  The fund seeks long-term capital appreciation, “adding value versus the MSCI EAFE Small Cap Index using a bottom-up quantitative approach to investing.” 

“International small caps can offer important diversification benefits as part of an equity allocation, but investors often overlook this asset class or have limited access to it,” explains Kenneth Swan, chief executive officer of LMCG.  “We believe that experienced active management can add value in this area and that a quantitative approach is the most efficient way to sort through the large universe of international small-cap stocks.”

The fund was previously available as a collective trust fund, available only to large institutional investors, but LMCG believes that mutual fund structure will appeal to financial advisers and their clients, “given the limited number of competitor funds and LMCG’s experience in this asset class.”

The fund is managed by Gordon Johnson, portfolio manager with more than 23 years of experience managing global portfolios and developing quantitative investment models. Shannon Ericson is co-portfolio manager, and Daniel Getler is portfolio analyst. The team “seeks international small-cap stocks with attractive valuations that also have good growth prospects and high quality earnings.”

The firm further explains the fund can serve as part of an equity allocation in a portfolio that seeks to diverse sources of return. “Additionally, the strong U.S. dollar has been a headwind for non-U.S. dollar-based assets since 2011. For investors who believe the US dollar will weaken, this fund can provide important non-U.S. dollar exposure.”

More information is at www.lmcgfunds.com.

NEXT: Voya Grows TDF Lineup 

Voya Grows TDF Lineup

Voya Investment Management has expanded access to its target-date mutual fund series, the Target Retirement Funds. 

According to Voya, the funds have been added to several new defined contribution platforms including Paychex, ADP and Ascensus. Voya has also launched two new share classes, A and R6, due to high demand from retirement plans.

“As a pioneer in target-date solutions, with over a decade of experience and over $11 billion in target-date assets, we are proud to fulfill an industry need and enhance our offerings in the DCIO space,” says Jake Tuzza, head of Voya Intermediary Distribution. “In our most recent 'Participant Preferences' survey, we found that target-date investors value a multi-manager structure, allowing for a more diverse array of asset classes and investment managers, as well as a reduction in single manager risk.”

Voya says the Target Retirement Funds provide investors with a number of features including an intelligent blend of both active and passive strategies; a participant-centric "to" glide path that emphasizes an aggressive investment approach early in a participant's career and a more conservative approach closer to retirement, relative to peers; and broad diversification of traditional and non-traditional asset classes.

More information about Voya's target-date survey can be found here.

NEXT: Fringe Benefits Teams with Redhawk

Fringe Benefits Teams with Redhawk

Registered investment adviser (RIA) Redhawk Wealth Advisors is teaming up with Fringe Benefits Design to serve as an independent Employee Retirement Income Security Act (ERISA) investment fiduciary.

In this capacity, Redhawk will utilize the E-Valuator application to provide ERISA 3(38) investment management and 3(21) investment adviser services, starting with a base of over 400 plans representing $750 million in plan assets. Redhawk will be responsible for performing the due diligence, selection, monitoring and replacement of investments for the plans, the firms explain.

The firms explain the service will help ERISA investment fiduciaries manage their responsibility to prudently select and monitor plan investments, especially the qualified default investment alternative (QDIA).  

“We conducted comprehensive due diligence on the top investment fiduciaries and were extremely impressed with the fiduciary services provided by Redhawk,” says Kevin Miller, president and CEO of Fringe Benefits Design. “In light of the new DOL fiduciary rule, we felt that it was important for all of our plans to have this fiduciary oversight.”

Rick Keast, president of Redhawk Wealth Advisors, says the new partnership is another win for the firm’s E-Valuator tool, which can help advisers figure out how to manage and mitigate fiduciary liability in their plans, portfolios and practices. 

Compliance April 6, 2016

Early Fiduciary Rule Interpretation from ERISA Experts

ERISA experts warn that it will take some time to judge the final fiduciary rule published by the DOL, given the serious length and complexity of the rulemaking language. 
Reported by

All told, the Department of Labor (DOL) published nearly 1,000 pages of text in its unveiling of the final fiduciary rule Wednesday morning, with implementation dates ranging from April 2017 through the beginning of 2018.

According to Russ Hirschhorn, a partner in the Employee Retirement Income Security Act (ERISA) Practice Center and the Labor & Employment group at law firm Proskauer, it will “take some real time before the industry has fully digested the rulemaking,” which appears to include a series of key changes from the version proposed in 2015.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

“The DOL says it has dialed back some of the requirements in the rulemaking that were challenged by the advisory industry, and that certainly appears to be the case according to the facts sheet the department issued this morning,” Hirschhorn tells PLANADVISER. “But I should also say that I think it’s still too soon to know with real confidence how much they have dialed this back.”

It’s not that he doesn’t believe the DOL when it says it has softened the rule, Hirschhorn says, “but I can tell you that probably nobody has made their way through the hundreds and hundreds of pages of complex language that make up the final rule.” He expects ERISA attorneys and other industry practitioners to slowly digest the rulemaking in the next several weeks. “Some will find they are well prepared, but for others, even with the changes, it will be a real operational challenge to come into compliance.”

At this early juncture, one clear win for the advisory industry skeptics who have opposed the rulemaking is the extended deadline for implementation and compliance, Hirschhorn feels. “According to the facts sheet, the first days of the implementation are not until April 2017, with a second phase in January of 2018, so this phased implementation is a positive thing. We were happy to see that at Proskauer, I can tell you, because we know that will obviously be easier for our clients to meet than a rule fully taking effect in 2016 would have been.”

Hirschhorn concludes that there is even less clarity, at this point, about how the final rulemaking will impact retirement plan advisers who are also active in the individual retirement account (IRA) market. While some restrictions on so-called “IRA cross-selling” have been cut from the final rule, he feels “the way the rulemaking will impact IRA sellers is extremely complicated, and it remains to be seen how this will play out.”

NEXT: Others are more confident 

After a very high-level overview, Michael Webb, vice president at Cammack Retirement Group, feels the DOL has made some significant changes between the most recent proposed rule and the final rule, “easing some of the adviser community's concerns.”

For example, he says it no longer seems that providing the names of specific retirement plan investments as part of asset-allocation modeling will automatically make someone a fiduciary. “A long-time practice of retirement plan recordkeepers, this will continue to be permitted as participant education,” Webb explains. “Under the proposed rule, such fund naming would have been considered an investment recommendation that would have been subject to the fiduciary rules and thus would have been unworkable for recordkeepers, who are not fiduciaries in most cases. It should be noted that the restriction on naming investments will still apply to IRAs.”

Webb adds that another key change, from the advisory firm perspective, is that the exemption from the final rule for larger retirement plans, or the so-called “sophisticated investor” provision, now defines such plans as those with $50 million or more in assets. “The threshold was $100 million under the proposed rule,” he explains.

“In another victory for the financial services industry, those who receive level fees (rates of compensation that do not change regardless of investments selected) will not be subject to the complicated rules known as the Best Interest Contract Exemption,” Webb concludes, adding that the previous BIC structure “would have effectively prevented individuals from advising participants on IRA rollovers if the adviser received compensation from the IRA product.”

«