Client Service August 7, 2018

Financial Wellness Offerings a Value-Added Service for DC Plan Clients

Adding education about managing debt to advisers’ offerings will increase their competitiveness as well as the effectiveness of clients’ DC plans, LIMRA SRI says.

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Nearly three-quarters (73%) of advisers report that they specifically offer financial wellness support to defined contribution (DC) plan clients, according to LIMRA Secure Retirement Institute (LIMRA SRI).

 

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“Financial wellness programs offer the adviser an opportunity to use creative ways to provide value-added services and programs to their plan sponsor clients,” LIMRA SRI says.

 

The study finds almost all DC advisers who provide financial wellness services offer retirement savings services and investing support (96% and 95%, respectively). Other financial wellness offerings include:

  • Rainy day/emergency funds (71%),
  • Budgeting and managing spending (66%),
  • College savings (66%),
  • Short-term saving to support planned expenses (59%), and
  • Managing debt including college loans and credit cards (58%).

 

LIMRA SRI says while most advisers support financial wellness services, managing debt is one of the least likely features to be included in the wellness programs, but as previous LIMRA SRI research has found, it has one of the strongest ties to one’s retirement savings. Adding this benefit to advisers’ offerings will increase their competitiveness as well as the effectiveness of clients’ DC plans.

 

The study finds advisers who include wellness offerings are also more likely to include other key participant services such as advice to plan participants, retirement income advice, advice to departing participants and custom allocation models.

 

The research shows most adviser groups are not inclined to increase the services they offer, and 15% of those who don’t currently offer financial wellness said they plan to do so in the next two years. In general, for those groups not looking to increase the number of services they offer, the best way to add value to their current offerings would be to enhance the services they already offer in their portfolio, LIMRA SRI says.
The Markets August 7, 2018

U.S. Equities Boost Institutional Investor Returns in Q2 2018

Second quarter rebounded slightly from last quarter, which posted negative median returns for all plans for the first time in nearly three years, according to Wilshire TUCS.

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Institutional assets tracked by Wilshire Trust Universe Comparison Service (Wilshire TUCS) posted an all-plan median return of 0.88% for second quarter and 7.50% for the year ending June 30.

Second quarter rebounded slightly from last quarter, which posted negative median returns for all plans for the first time in nearly three years.

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Public funds posted the best quarterly and one-year returns, 1.34% and 8.55%, respectively, of all plan types, while corporate funds posted the lowest, 0.42% and 5.52%, respectively. Foundations and endowments posted quarterly and one-year returns of 1.06% and 7.71%, respectively. Returns for Taft Hartley defined benefit (DB) plans were 0.72% and 7.96%, respectively, and for Taft Hartley health and welfare funds were 1.23% and 5.98%, respectively.

“Exposure to U.S equities clearly helped fuel plan performance second quarter,” says Jason Schwarz, president, Wilshire Analytics and Wilshire Funds Management.  “The recent mix of positive economic indicators and generally strong earnings results has helped drive equity returns higher.”

U.S. equities, represented by the Wilshire 5000 Total Market Index, gained 3.83% second quarter and posted a 14.66% gain for the June 30 one-year. Meanwhile, international equities, represented by the MSCI AC World ex U.S., fell -2.61% second quarter with a net gain of 7.28% for the year. U.S. bonds, as represented by the Wilshire Bond Index, also fell second quarter, posting -0.25% and -0.59% for the quarter and year, respectively.

Quarterly median returns across plan types ranged from 0.26% to 1.56% for large corporate funds (assets greater than $1 billion) and large foundations and endowments (assets greater than $500 million), respectively. One-year returns spanned low and high medians from the same, ranging from 4.64% to 10.03% for large corporate funds and large foundations and endowments, respectively.

“The 60/40 portfolio outperformed all plan types, posting a 2.20% gain for the quarter,” says Schwarz. “While all plans types fell short of the quarter’s 1.8% target needed for a 7.5% annual return, medians were positive across the board due mostly to U.S. equity exposure.”

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