Products March 30, 2016

Firms Partner to Provide DC Retirement Plan Platform

Folio Institutional and KTRADE now offer advisers and their DC plan sponsor clients high value, enhanced retirement plan administration, investment selection and fiduciary liability management services
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Folio Institutional, a platform for registered investment advisers (RIAs) that combines clearing, custody and an array of technology services, has partnered with North American KTRADE Alliance, LLC to give plan sponsors and their advisers a better way to avoid conflicts of interest, manage defined contribution (DC) plan costs and enhance plan participant services.

Founded in 2004, KTRADE is a recordkeeping firm with a deep understanding of the RIA industry and managed accounts. It serves retirement plans through its open architecture, CEFEX and Soc 1-certified recordkeeping service. KTRADE provide a well-designed path to retirement security through its national network of 22 third-party administrators.

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Folio Institutional and KTRADE now offer advisers and their DC plan sponsor clients high value, enhanced retirement plan administration, investment selection and fiduciary liability management services. Folio Institutional’s Model Manager Exchange (MMX), Folio(k), and Unitization services make it possible to move away from lists of proprietary investment products, mutual funds or exchange-traded funds (ETFs). Firms using Folio technology can build portfolios of individual securities, rather than using these packaged products that have embedded costs.

In addition, plan sponsors and their advisers can create more tailored, transparent retirement plans that meet plan participants’ needs thanks to Folio Institutional’s fractional share investing capabilities and delivery of licensed model portfolios.

  • Model Manager Exchange gives advisers access to hundreds of third-party portfolio models. Advisers have the power to create and manage customized models and simultaneously update hundreds of client accounts in a few easy steps;
  • Folio(k) – advisers and plan sponsors may easily create or manage core plan investments through Folio’s Target Date Folios—more than 20 pre-designed, yet customizable, ETF portfolios with three different risk levels that are optimized for retirement investing; and
  • Unitization – plan sponsors can broaden their retirement product offerings and eliminate net asset value (NAV) requirements with unitized model portfolios that consist of any mix of securities.

“Today, advisers and plan sponsors are facing critical issues that will impact their ability to act on behalf of plan participants, manage costs and grow their business,” says Greg Vigrass, president of Folio Institutional. “Fiduciary duty, conflict management scrutiny and the growing number of retirees are just some of the pressures causing them to review their DC plan’s administrative costs and investment products. This partnership delivers timely solutions that ultimately benefit plan participants.”

Advisers and plan sponsors may learn more about the benefits of the partnership by contacting Alan Smith, Folio Institutional vice president, at smitha@folioinstitutional.com.
Data & Research March 30, 2016

Parents Using Retirement Savings for Non-Emergencies

In addition, a survey found, spoiling children is hurting parents' finances.
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When asked which is a higher priority, 67% of parents surveyed for T. Rowe Price’s 2016 Parents, Kids & Money Survey said saving for their children’s college education is more important than saving for retirement.

Many are using retirement savings to fund other non-urgent priorities: 44% of parents have used their retirement savings to fund non-emergencies during the past two years, including paying off debt (17%), vacation (17%), kids’ education (16%), and day-to-day expenses (15%). The research found retirement funds are more likely to be tapped for non-emergencies than emergencies. 37% have tapped retirement savings to cover emergencies, including health care costs (16%), home repair or renovation (15%), car purchase or repair (13%), taxes (12%), and covering expenses while unemployed (10%).

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While some parents may have tapped retirement savings for multiple reasons, a small percentage (8%) of parents have tapped retirement savings for only emergencies. Forty-eight percent of parents have not tapped retirement savings during the past two years.

Discussing retirement savings makes many parents anxious: 60% of parents agree with the statement, “Conversations about saving for retirement usually fill me with a lot of anxiety.”

They do not know how much to save for retirement: 53% of parents agree with the statement, “If I save 6% of my income toward retirement, I’ll have enough money to comfortably retire at age 65.” T. Rowe Price recommends investors save at least 15% of their income toward retirement, including any company match, in order to potentially replace 75% of their preretirement income.

According to the survey, 67% of parents would rather go into debt than pull money from a retirement account if faced with a financial hardship that they couldn’t otherwise cover. In fact, if faced with a hardship, many would rather use credit cards (42%), ask family or friends for money (38%), or take a personal loan (24%) before tapping retirement savings (22%).

NEXT: Spoiled children affect parents’ finances

Parents are not always using emergency funds for emergencies: 55% of parents have used their emergency funds to cover non-emergencies, including day-to-day expenses (24%), paying off debt (22%), kids' education (20%), and daycare/childcare (13%).

Most have insufficient emergency funds: 72% of parents do not have sufficient emergency funds to cover at least three months' worth of living expenses, including 49% who do not even have an emergency fund. T. Rowe Price recommends having an emergency fund large enough to cover at least three to six months of living expenses in the event of an unanticipated need.

Nearly half (46%) of parents have gone into debt to pay for something their kids wanted. Many parents say they spend too much on things their kids do not need: 57% of parents agree with the statement, "I spend too much money on my kids for things they don't really need," and 58% of parents agree with the statement, "I worry that I spoil my kids."

Fifty-seven percent of kids agree with the statement, "I expect my parents to buy me what I want."

The survey sampled 1,086 parents of eight- to 14-year-olds nationally. The research report may be downloaded from here.

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