The Markets November 21, 2017

Responsible Investing Strategies Still a Challenge for Advisers

Only 21% of advisers surveyed reported feeling very well informed about responsible investing strategies, and the survey found accessing ESG data is a challenge for advisers.

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Responsible investing continues to gain traction with advisers and their clients, according to the Q4 2017 Eaton Vance Advisor Top-of-Mind Index (ATOMIX) survey of 1,000 financial advisers.

Eighty-four percent of advisers reported their clients have at least some interest in responsible investing options. However, 82% also believe responsible Investing has a long way to go before it becomes mainstream.

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One-third (33%) of advisers said they are not adequately informed about responsible investing strategies and another 38% said while somewhat informed, they are looking for further education. Only 21% reported feeling very well informed.

Accessing environmental, social and governance (ESG) data is a challenge for advisers. Sixty-nine percent said corporate sustainability data is hard for investors to obtain. Thirty-seven percent worry about achieving diversification with a responsibly invested fund.

Overall, most advisers believe responsible investing strategies perform relatively well. Seventy-two percent said responsible investing solutions pose the same or less risk as traditional strategies, while 71% said responsible investments are equally as or less volatile than traditional strategies, and 61% believe responsible investment strategies perform the same or better than traditional strategies. 

Client priorities for responsible investing continue to be environmentally focused, with clean energy (53%), sustainability (45%) and climate change (41%) emerging as the dominant reasons for selecting responsible investments.

“Clients are pursuing investment opportunities that align with their personal values,” says Anthony Eames, director of responsible investing strategy, Calvert Research and Management. “The demand for Responsible Investing strategies continues to rise, and advisors who deliver those strategies will emerge as sought-after experts in the field.”

He adds: “The lack of understanding about ESG principals prompted us to create Calvert’s Responsible Investing framework. Our investment strategies follow the Four Pillars of Responsible Investing—performance, research, engagement and impact—which empower investors to seek competitive returns and access the full capital structure with portfolios that reflect their values.”

More findings from the ATOMIX may be found here.
Compliance November 21, 2017

Regulators Release Informational Copies of 2017 Form 5500

The new forms include important modifications.

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The U.S. Department of Labor’s (DOL)’s Employee Benefits Security Administration (EBSA), the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) released advance informational copies of the 2017 Form 5500 annual return/report and related instructions.

They are for informational purposes only and cannot be used to file a 2017 Form 5500 annual return/report.

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The “Changes to Note” section of the 2017 instructions highlight important modifications to the Form 5500 and Form 5500-SF and their schedules and instructions. 

Modifications include:

  • IRS-Only Questions. IRS-only questions that filers were not required to complete on the 2016 Form 5500 have been removed from the Form 5500, Form 5500-SF and Schedules, including preparer information, trust information, Schedules H and I, lines 4o, and Schedule R, Part VII, regarding the IRS Compliance questions (Part IX of the 2016 Form 5500-SF).
  • Authorized Service Provider Signatures. The instructions for authorized service provider signatures have been updated to reflect the ability for service providers to sign electronic filings on the plan sponsor and Direct Filing Entity (DFE) lines, where applicable, in addition to signing on behalf of plan administrators.
  • Administrative Penalties. The instructions have been updated to reflect an increase in the maximum civil penalty amount assessable under the Employee Retirement Income Security Act section 502(c)(2) required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. Department regulations published on January 18, 2017, increased the maximum penalty to $2,097 a day for a plan administrator who fails or refuses to file a complete or accurate Form 5500 report. The increased penalty under section 502(c)(2) is applicable for civil penalties assessed after January 13, 2017, whose associated violation(s) occurred after November 2, 2015—the date of enactment of the  2015 Inflation Adjustment Act.
  • Form 5500/5500-SF-Plan Name Change. Line 4 of the Form 5500 and Form 5500-SF have been changed to provide a field for filers to indicate the name of the plan has changed. The instructions for line 4 have been updated to reflect the change. The instructions for line 1a have also been updated to advise filers that if the plan changed its name from the prior year filing(s), complete line 4 to indicate that the plan was previously identified by a different name.
  • Schedule MB.  The instructions for line 6c have been updated to add mortality codes for several variants of the RP-2014 mortality table and to add a description of the mortality projection technique and scale to the Schedule MB, line 6 – Statement of Actuarial Assumptions/Methods.
  • Form 5500-SF-Line 6c. Line 6c has been modified to add a new question for defined benefit (DB) plans that answer “Yes” to the existing question about whether the plan is covered under the PBGC insurance program. The new question asks PBGC-covered plans to enter the confirmation number—generated in the “My Plan Administration Account system”—for the PBGC premium filing for the plan year to which the 5500-SF applies. For example, the confirmation number for the 2017 premium filing is reported on the 2017 Form 5500-SF.
Filers should monitor the EFAST website for the availability of the official electronic versions for filing using EFAST-approved software or directly through the EFAST website.

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