Products July 27, 2017

Investment Products and Service Launches

Aria’s RetireOne Platform Offering Variable Annuity; Vanguard Launches Global Balanced Funds; Pensionmark Rolls Out New Investment Reporting Tools; and more.
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Aria’s RetireOne Platform Offering Variable Annuity

Aria Retirement Solutions has partnered with Great-West Financial to offer a fee-based variable annuity through its RetireOne platform.

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The Great-West Smart Track Advisor Variable Annuity aims to provide investment advisers with a flexible and customizable solution for clients seeking investment growth and retirement income. The offering is designed to offer an investment strategy with more than 90 subaccounts; the ability to add the living benefit rider after issue until guaranteed income is needed; and withdrawal rates up to 6% at age 65 for life.It also allows for single and joint riders for the same cost, and the option to choose single or joint when income starts.

Advisers can choose to bill for the advisory fee separately or have the fee (up to 1.50%) deducted from the annuity contract without disrupting any guarantees, the firm says. Advisers can also choose the share class and fee structure that meets the needs of each client.

“Our goal is to consistently bring value to our clients’ retirement planning with tax-deferred, sustainable lifetime income solutions,” says David Stone, chief executive officer for Aria. “We look forward to working with Great-West Financial to offer Smart Track Advisor to help meet that need.”

NEXT: Vanguard Launches Global Balanced Funds

Vanguard Launches Global Balanced Funds

Vanguard has expanded its balanced fund lineup with the addition of two actively-managed, globally focused vehicles.

The Global Wellington Fund will seek to provide long-term capital appreciation and moderate current income through a globally diversified portfolio invested in both equities and fixed income securities. It will have approximately 65% of assets invested in equities and 35% of assets invested in fixed income.

The Global Wellesley Income Fund will take a more conservative approach in primary pursuit of a high and sustainable level of current income, along with moderate long-term capital appreciation. Approximately 65% of its portfolio will be allocated to fixed income securities and 35% to equities.

Wellington Management Company LLP (WMC) will serve as the investment adviser to these new funds. 

“The Global Wellington and Global Wellesley Income Funds will offer investors the convenience of a turnkey investment program in a single fund, providing broad diversification among global stocks and bonds,” says Vanguard CEO Bill McNabb. “The funds reflect a thoughtfully constructed mix of domestic and international securities and represent Vanguard’s fundamental, time-tested investment principles—balance, diversification, discipline, low-cost, and a long-term orientation.”

NEXT: Pensionmark Rolls Out New Investment Reporting Tools

Pensionmark Rolls Out New Investment Reporting Tools

In an effort to provide plan sponsor and adviser clients with more comprehensive support in investment analysis, Pensionmark has unveiled a series of proprietary reporting tools.

These offerings include the SMART Score Investment Monitoring System and qualitative Manager Research Reports, as well as Target-Date and Stable Value Analytic Reports.

SMART Score is a scoring system monitoring client investment lineups. The tool identifies investment managers whose approach more properly aligns with that of retirement savers, while flagging and addressing those whose approach does not. The scoring system emphasizes consistency and long-term, risk-adjusted outperformance versus peers.

The Manager Research Reports provide a full accounting of the qualitative aspects of an investment strategy under consideration by a plan sponsor. These reports highlight details such as investment strategy, buy-and-sell decisions, risk controls, and manager and analyst compensation.

The Target-Date and Stable Value Analytic Reports provide additional quantitative and qualitative analysis specific to those investment types beyond the SMART score data. Advisers and plan sponsors can view their current target-date series or stable value fund either as a standalone or benchmarked against up to three other options.

Data and analysis for these new tools is gathered and prepared at the Pensionmark corporate offices and delivered to advisers and plan sponsors on demand.

"As a firm, we reached a point where there wasn't a tool out there that provided our advisers and plan sponsors with the breadth and depth they were looking for,” says Ronnie Cox, director of Investments for Pensionmark. As opposed to relying on third-party tools, creating in-house reporting not only allows us to provide unbiased analysis, but also take full control over enhancements to stay on top of the latest regulatory, legislative and industry changes to address client needs."

NEXT: ProShares Launches Rising-Rates Focused ETF 

ProShares Launches Rising-Rates Focused ETF

The ProShares Equities for Rising Rates ETF will aim to outperform traditional large-cap indexes such as the S&P 500 in a rising interest rate environment. The fund is benchmarked to the Nasdaq U.S. Large Cap Equities for Rising Rates Index and is listed on the NASDAQ exchange.

“EQRR is for investors who expect rising interest rates and want to outperform traditional large-cap indexes as rates go up,” says Michael L. Sapir, co‑founder and CEO of ProShare Advisors, LLC, the adviser to ProShares. “EQRR takes those sectors most positively correlated with interest rates, then within those sectors invests in the companies that have tended to outperform during periods of rising rates."

The exchange-traded fund (ETF) tracks an index employing a methodology that starts with the 500 largest listed U.S. stocks and selects the five U.S. large-cap sectors that have most recently demonstrated the highest correlation to weekly changes in 10-year U.S. Treasury yields. It then identifies the top 10 stocks in each sector that have the highest correlation of relative performance—versus 500 of the largest listed U.S. stocks—to changes in the 10-Year yield. Stocks in sectors with a higher correlation to rising rates have a heavier weighting in the index. This process is repeated quarterly to maintain a portfolio of 50 stocks. The resulting portfolio aims to provide relative outperformance compared to traditional large-cap indexes during periods of rising U.S. Treasury interest rates.

NEXT: American Century Enhances One Choice Target-Date Portfolios

American Century Enhances One Choice Target-Date Portfolios

In an effort to revamp its risk-management strategy and reduce fees, American Century Investments is rolling out a series of enhancements to its One Choice Target-Date Portfolios which are designed to help investors reach a comfortable retirement.

“The introduction of Dynamic Risk Management on July 31 will allow us to fine-tune the balance of risks for a broad range of participants," says Rich Weiss, CIO, Multi-Asset Strategies.

The team uses a proprietary signal to determine the market environment and determine a set of allocation rules for investors. The signal picks up on intermediate-term trends to capture larger environmental shifts while limiting turnover and preventing reactions to short-term market noise, Weiss explains.

Working from this data, the team will aim to push younger investors deeper into equities when market environments are favorable of stocks in order to hedge against the risk of longevity. In unfavorable market environments, as determined by the team’s research, the group would move participants closer to retirement away from equity exposure in order to preserve their savings.

"We have always believed that the slope of the glide path, or how much you change risk over time, has a definitive relationship with investor outcomes,” says Weiss. “It's our opinion that a flatter guide path slope helps to minimize the potentially harmful effects of market cyclicality and reduce unwanted volatility for participants."

NEXT: Nationwide Partners with Hueler for New Annuity

Nationwide Partners with Hueler for New Annuity

Nationwide is partnering with Hueler Income Solutions to offer its INCOME Promise Select single premium immediate annuity (SPIA) on the Income Solutions platform.

The Income Solutions platform is a fully automated annuity marketplace created specifically for the active employee or retiree who may want or need to convert a portion of retirement savings into a guaranteed income stream.

With this annuity, a person can generate income for an individual or two people for a specific period of time or for life. Its liquidity feature allows a person to take a lump-sum withdrawal in the event of a financial emergency. This feature is available with any payment option that includes a term-certain or cash-refund

"Nationwide is pleased to partner with Hueler and join the Income Solutions platform, offering our INCOME Promise Select immediate annuity," says Mike Morrone, associate vice president of fixed annuity strategy at Nationwide. "This opportunity will provide investors a way to receive a guaranteed stream of income and supports our mission to help Americans prepare for and live in retirement."

In Practice July 27, 2017

Adviser Marketing and Service Evolve With Plan Sponsor Demands

Elite retirement plan advisers are using new and proven tactics to meet the growing demands of plan sponsors in an evolving industry. 
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The ongoing implementation of the Department of Labor (DOL)’s fiduciary rule is reshaping the defined contribution (DC) adviser landscape, but some analysts say the space has been undergoing substantial change for quite some time.

Tom Woods, senior vice president of sales at Fidelity Investments, says he’s seen the role of advisers change significantly in the last few years. Woods observes advisers moving away from focusing on evaluating funds for a plan’s lineup and mitigating fiduciary risk. They are expanding the scope by offering a broader set of services to keep up with plan sponsor demands. These include playing larger roles in plan designs, educating and advising participants, and working with other plan stakeholders in a more strategic manner.

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He says services pertaining to financial wellness and health savings accounts (HSAs) are also appealing more to plan sponsors today.

“Plan sponsors are more and more inquisitive about these things and looking to advisers for guidance,” Woods says. “This presents tremendous opportunity to differentiate yourself from someone who may be only focused on lowering fees and selecting investments.”

Donn Hess, senior vice president, Lockton Retirement Services, observes a similar trend. While he notes there’s still a great demand for basic adviser services like mitigating fiduciary risk, especially in light of ongoing litigation in the space, he sees a growing demand for advice on programs around executive benefits and financial wellness.

“Financial wellness is such a huge topic and has so many moving pieces,” Hess explains. “I think a lot of clients are turning to their advisers for help in defining what their issues are and then narrowing the scope of the solutions and providers available.” But given the industry’s heightened scrutiny on fees, sponsors also want the price tag for these services to remain relatively low.

NEXT: Competing on more than price 

“As we have seen with defined contribution (DC) recordkeeping platforms, we’ve also seen fee reductions impact advisers, and their clients are expecting them to do more today than ever for the same or less amount of money, and that’s a real challenge,” Woods explains. He believes slashing fees alone won’t allow advisers to stand out, whether they’re independent or connected to large firms. “Advisers need to clearly define their value proposition,” Woods says. “Some make the mistake of just cutting fees and competing on price alone.”

Woods sees the more successful advisers taking advantage of traditional marketing tactics such as maximizing referrals and leveraging centers of influence. They are also exploring non-traditional territory such as social media and even automated marketing.

“I think over the past five years, there has been a significant effort by a very small number of retirement focused advisers to take advantage of digital tools and social media marketing,” Woods explains. “Those willing to invest in a consistent approach are having success.”

When it comes to social media, an effective marketing strategy needs to be proactive and carefully controlled. Woods sees advisers benefiting from targeting specific clients, growing relationships, and strategically asking for referrals. Woods says some advisers send out lists of companies they’re interested in working with to clients they’ve developed good relationships with, asking for personal introductions via LinkedIn or another network. Some advisers are even leveraging Facebook to target potential clients and foster deeper personal connections.

“Advisers have been very effective in leveraging their Facebook presence to make contact with a targeted audience,” Woods says. “What I hear is that it’s a much more personal relationship that can evolve. These advisers are very mindful of the profile they have on Facebook and the connections they have to make sure they’re delivering the right image. Clients can also see pictures of their families and personal interests.”

Hess says social media is serving as a reference for prospects to validate advisers’ expertise. He says it’s a great platform to showcase thought leadership pieces.

NEXT: Traditional centers of influence 

Jamie Bentley, PIMCO’s senior vice president and national retirement sales manager, says advisers are still seeing success in developing relationships with traditional centers of influence. These include CPA firms, auditors, ERISA attorneys and third-party administrators (TPAs).

He says advisers have also benefited from hosting local seminars offering plan sponsors continuing education credit, while providing insight on topics most pertinent to their plans.

“This allows the adviser a forum to establish their credibility as a retirement plan expert and helps them to build a base a quality plan sponsor prospects,” Bentley says. “In many cases, advisers use third-party marketing and event planning firms to help with the logistics.”

Hess says Lockton has had success with recent summits and webinars on avoiding DC plan litigation, a topic that some of its university clients have reached out to the firm to learn more about.

Bentley notes that levering recordkeeping and asset management partners for lead generation support is also popular. This tactic is similar to what Hess calls relationship marketing, where he’s seen the most growth. In this case, retirement services firms reach out to other lines of business within their parent company for referrals.

“As the benefits industry becomes more sophisticated, clients are looking for advisers who are part of a network that can bring a more holistic solution,” Hess concludes. “So if I’m working with an adviser that knows people with expertise in health and welfare, that’s going to make the retirement advice more robust and they’re going to help you solve more problems.”

While this is an advantage for larger firms, independent advisers and smaller firms still have several options. Hess notes that individuals tend to more heavily leverage social media presence, webinars and other tech-driven strategies. Many small firms are also partnering with larger ones.

“Specifically, teams that are more individual wealth-focused but who have a small number of retirement plan clients are encouraged to partner with teams who are more solely focused on retirement plans,” Bentley says. “The idea is that bringing in a deeper level of retirement plan expertise is in the best interest of the plan sponsor client.”

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