Products May 28, 2009

New York Life Offers Advice Service for Taft-Hartley Plans

New York Life Retirement Plan Services introduced a tailored advice service designed specifically for union clients and their members.
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The service, OnTarget Personal Advisor, couples online access to research, education, and advice services through Morningstar Retirement Manager with New York Life’s participant services, including automatic rebalancing, targeted participant communications, and participant service support for member-directed plans, according to a press release.

Morningstar Associates acts as a fiduciary for the investment advice it provides through Morningstar Retirement Manager.

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The service is designed specifically to meet the unique complexities Taft-Hartley members face in retirement planning, including contribution amounts by multiple employers, contributions in hourly figures, pension information from multiple employers and, in many instances, their own 401(k) contributions. Available without charge to union providers, the service will be made available to New York Life’s Taft-Hartley clients over the next several weeks.

“Because this service takes into account the unique needs of union members and plans, we expect it to become an invaluable retirement planning tool for our union participant base,” said Buck Bucci, director and head of Taft-Hartley Services at New York Life Retirement Plan Services, a division of New York Life Investments, in the release.

 

 

More information is available at www.nylim.com/retirement.

Products May 28, 2009

Morningstar to Launch Target-Date Ratings, Research

Morningstar, Inc., said it will offer ratings and in-depth research reports for target-date fund series.
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A press release said that based on the aggregate scores of five components (with 100 points being the maximum), each target-date fund series earns one of five ratings: Top, Above Average, Average, Below Average, or Bottom. Morningstar will review and update the ratings annually.

The five components, according to the release, are:

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1. people

  • examines the fund series’ management team and how well Morningstar thinks they’ll serve shareholders over the long term, and incorporates factors including management tenure, past performance, and research support;
  • considers the criteria used to determine fund managers’ compensation and whether or not the incentive is to deliver strong long-term returns to shareholders; also assesses the manager’s financial commitment to the fund through direct ownership of shares;
  • assesses the fund board overseeing the target-date series by determining if the fund board is sufficiently independent of the fund adviser and whether or not the board has consistently acted in shareholders’ best interest.

2. parent

  • evaluates whether fund companies consistently put shareholders’ interests first;
  • examines how well fund companies explain how their target-date funds operate to current or potential shareholders in their publicly available materials;
  • notes any regulatory issues at the fund company within recent years.

 

3. performance—assesses how well a series of target-date funds has performed historically relative to its peers on a risk-adjusted basis, taking into account the relatively short performance histories of many series, and assigns a score to each target-date fund series based on a comparison to the universe average.

 

4. portfolio—calculates a weighted average Morningstar Rating for Funds (the “star rating”) for the underlying holdings in the series to determine the investment quality of the funds.

 

5. price

  • assesses the actual costs investors pay by selecting the lowest-cost share class that has at least 10% of the overall assets in the target-date fund series. The net prospectus expense ratios for that share class are then averaged across all of the funds in the series;
  • assigns score to each target-date fund series based on a comparison to the universe average.

Each research report will contain detailed commentary by a Morningstar fund analyst on all aspects of the scoring, as well as additional analysis of non-scored aspects of target-date funds’ structure and components, Morningstar said.

Reports about participant misconceptions of target-date funds (see “Workers Might Have Wrong Idea about Target-Date Funds“) as well as the wide range of equity allocations for different funds (see “Target-Date Funds Display Wide Range in Equity Allocations“) has led the U.S. Senate (see “Senate Committee Takes Aim at Target-Date Funds“) and the SEC and DoL (see “More Details Released about Target-Date Hearing‘) to take a more intense look at them.

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