Products January 10, 2018

CapitalRock Expands Analysis for Rollover and Exchange Solution

The firm's rollover/exchange analysis will consider more plan types, including 401(k), 403(b), 457, defined benefit plans and more.  

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In an effort to create simpler and consolidated steps for advisers when completing rollovers or exchanges under the impartial conduct standard, CapitalRock has amplified its analysis for RightBRIDGE Product Profiler, their rollover/exchange module.

 

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Along with reducing steps taken to complete rollovers or exchanges, CapitalRock says this surplus of analysis can help in eradicating manual re-entries of data.

 

The Product Profiler, created by CapitalRock to evaluate if a 401(k) rollover is suitable for a client, is based on quantitative and qualitative questions on current fees, employer contributions and other features. The module then utilizes a scoring methodology to regulate whether a rollover is fitting for a client or not. During Q4 of 2017, the solution was stretched to incorporate several 401(k) rollovers in the analysis. Benchmarking average fees based on the size of the 401(k) and investment offerings were also implemented, according to CapitalRock.


The firm says it is now offering the rollover/exchange analysis to additional retirement plans, including 401(k), 403(b), 457, individual retirement accounts (IRAs), IRA-annuity, nonqualified annuity and defined benefit (DB) plans. This extension comes after numerous current clients from CapitalRock requested for an expansion towards other plans.

 

“After completing the first phase of the Product Profiler development we recognized the need to expand the rollover/exchange analysis to include other qualified and retirement plans. With the impartial conduct standard in place it is necessary to analyze and document the rollover/exchange process. Most firms are currently using a paper-based form to meet this requirement. By expanding the Product Profiler analysis to include additional plan types we can assist and automate much of the current process,” says John Hyde, president and CEO of CapitalRock. “Now that we have implemented the Product Profiler at more than a dozen broker dealers we have received requests from our current clients to expand the functionality for additional plans.”

 

According to CapitalRock, this added analysis will unfold in a two-step process, the first with a short set of questions determining if a more detailed examination is needed, and will be scored using color indicators. Should the indicator turn red, no additional analysis is needed. However, plans scoring a green or yellow indicator will require further detailed analysis on comparing features and fees.

 

“We recognize that the most difficult part of a rollover or exchange is comparing features and fees,” says Brian Hendricks, senior vice president of Operations at CapitalRock. “Researching and finding current plan details is often difficult. If a plan is determined to be a valid candidate for a rollover/exchange then we move on to the second step in the process and get more detailed information on both the current plan and the proposed plan/product.”

 

Aside from the RightBRIDGE Product Profiler and the RightBRIDGE scoring engine, CapitalRock plans to utilize extra resources such as their ReasonText, a feature explaining why rollovers/exchanges would benefit or hurt certain plans. If extended analysis on specific product selection is needed, the RightBRIDGE Annuity Wizard or Investment Wizard tools may be implemented, says CapitalRock.

 

The additional evaluation will be completed in the RightBRIDGE solution at the end of Q1 2018.

The Markets January 10, 2018

Number of Institutional Investors Using ESG Factors in Decisions Holds Steady

Only 39% of institutional investors surveyed by Callan that do not include ESG factors in investment decision-making said the value proposition for ESG remains unclear, down from 63% in 2016.

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Adoption rates of environmental, social, and governance (ESG) factors into the investment decision-making process among institutional investors has leveled off, according to the Callan 2017 ESG survey.

Overall incorporation of ESG factors into investment decision-making plateaued at 37% of respondents in 2017, on par with 2016 (37%) and up from 2013 (22%). Callan says this trend reflects changing survey respondents over time (a larger portion of smaller and corporate funds responded in 2017 than in previous years), as well as multiple years of investor education around ESG coming to fruition.

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Further suggesting a plateau in adoption rates, 7% of respondent firms that have not yet incorporated ESG factors into investment decisions were considering doing so in the future, down from 22% in 2016. There has been a 68% increase in the rate of ESG adoption since inception of Callan’s survey in 2013.

The largest of funds (with $20 billion in assets under management or more) continued to incorporate ESG factors into the investment decision-making process at a much higher rate than their smaller counterparts: 78% for the largest funds compared to 30% for the smallest funds ($500 million in assets or less).

Foundations reported the highest rate of ESG incorporation (56%) in 2017, followed by endowments (39%), public funds (35%) and corporate funds (25%).

The top implementation method for survey respondents that are incorporating ESG into investment decisions in 2017 was to add language to the investment policy statement (50%). The top reasons cited for incorporating ESG factors into investment decisions in 2017 were:

  • My fund must consider ESG factors as part of our fiduciary responsibility (47%);
  • The fund’s investment policy statement dictates that we consider ESG factors (42%);
  • We expect to achieve higher returns and we expect to achieve an improved risk profile (32%).

More than half (61%) of U.S. institutional investors that responded to the survey have not incorporated ESG factors into investment decision-making, in line with 2016 (60%). The most common reason cited in 2017 was that the fund would not consider any factors that are not purely financial in the investment decision-making process (41%). The next most popular answer was that the value proposition for ESG remains unclear (39%). Callan notes this is down from 63% in 2016.

Callan’s 2017 ESG Survey reflects input from 105 unique institutional U.S. funds and trusts with more than $1.1 trillion in assets.

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