Products September 16, 2019

Nasdaq and Wilmington Trust to Provide Tickers for CITs

The two entities look to encourage CIT adoption among investors, a move that they say has stalled due to low awareness of the funds.

Reported by

Wilmington Trust and Nasdaq have partnered to offer tickers for over 200 collective investment trusts (CITs) on the Nasdaq Fund Network (NFN).

The two entities look to encourage CIT adoption among investors, a move that they say has stalled due to low awareness of the funds. Comparable to mutual funds, CITs are low-cost investment vehicles accessible via 401(k) plans, but have largely remained unacknowledged in the past due to little understanding in price and performance.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

Rob Barnett, head of Retirement Distribution & product leader for Wilmington Trust’s CIT Business, expects the standardized tickers will incite clarity and usage of CITs, especially as investors, employers, and advisers will have access to greater information.

“Our hope is relative transparency,” he tells PLANSPONSOR. “We’re giving broader reach for CITs, so participants and plan sponsors can use it, and so advisers have easier access. This will allow participants to find price and performance by going into NFN’s search engine and typing up the ticker.”

According to a recent report by Cerulli Associates and the Coalition of Collective Investment Trusts, the lower cost associated to CITs is the primary driver of their growth. However, more than 40% of CIT providers identified a lack of knowledge among advisers as a top challenge to their adoption in DC plans, along with a noticed absence of transparency. The small amount of reporting done on CITs contributes to its little adoption, compared to the more common mutual fund. More than half of providers noted a lack of CIT information threatens the fund’s adoption, according to Cerruli.

“If advisers find it difficult to find information on a CIT, they’re going to have trouble recommending it,” says Barnett.

At Nasdaq, the NFN works as a global dissemination service, collecting and spreading data and information on over 35,000 mutual funds, market funds and other investment options to the public. Its aim is to provide detailed, daily analysis on investment funds and products. The Network was relaunched in March 2019 from its previous name, the Mutual Fund Quotation Services (MFQS), and Wilmington Trust will be the first institution to register CITs with the Network.

“It is more important than ever for our clients to understand the various investment vehicles and make informed choices,” says Christopher Randall, head of Retirement and Institutional Custody Services at Wilmington Trust. “As the first institution to register CITs with Nasdaq Fund Network, we are helping overcome a major challenge to widespread adoption of CITs, providing the information advisers, plan sponsors and participants need to make fully informed decisions.”

Barnett believes implementing these tickers will inspire other firms to follow, both in embracing CIT adoption and awareness.

“Our hope is that we’re not just the first, that there are others that adopt this process,” he says.  “That we’re not just the only user, but that we can help create this widespread use of information across all CITs.”

Client Service September 16, 2019

Planning for Wealth Transfer a Value Add From Financial Advisers

Studies show all generations find legacy planning important and those who receive an inheritance feel more financially secure. And, Lincoln Financial has introduced a product to help advisers stretch clients’ inheritances over their lifetimes.

Reported by

According to the LIMRA Secure Retirement Institute, more than $7 trillion will be inherited by Baby Boomers and younger generations in the next several years. In addition, nearly three-quarters of these investible assets are held in taxable accounts.

According to a recent survey by financial services firm Edward Jones, 77% of Americans believe that estate and legacy strategies are important for everyone, not just wealthy individuals, yet only 24% of Americans are taking the most basic step of designating beneficiaries for all of their accounts.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

Of Americans who work with financial advisers, 64% reported never having discussed estate goals and legacy plans with their financial adviser. Furthermore, only 34% of Millennials and Gen Xers have discussed their estate/legacy goals with their financial advisers, which increased only minimally for Baby Boomers (38%), the generation most likely to need estate plans in the near future.

However, almost all Americans who have discussed their estate/legacy goals with their financial advisers have updated their plan since creating it (98%). Additionally, 61% involved their family the last time they reviewed their estate/legacy plan with their financial adviser, increasing to 74% for Americans with children in the household.

“Designating beneficiaries on each of your appropriate accounts is the simplest and quickest way to get started. To ensure loved ones are taken care of, it’s crucial to review and update estate plans regularly, and most importantly, communicate these wishes to the beneficiaries throughout the process,” says Scott Thoma, principal with the Investment Strategy group at Edward Jones.

People who have received an inheritance from their parents or relatives are more than twice as likely than those who haven’t to feel prepared for retirement (38% versus 17%), according to a survey by the Associated Press-NORC Center for Public Affairs Research. Older Americans with an inheritance are also more likely to believe that their savings will last throughout their retirement (37% versus 21%).

Lincoln Financial Group has introduced Lincoln Wealth Pass, a new withdrawal rider that is specifically designed to help beneficiaries stretch and protect the money they’ve inherited. Lincoln Wealth Pass is available with American Legacy , Lincoln ChoicePlus Assurance and Lincoln InvestmentSolutions variable annuities for an additional cost, and offers an opportunity for beneficiaries to guarantee they receive their full inheritance by stretching distributions over their life expectancy. Lincoln Wealth Pass is designed to help financial advisers and their clients efficiently transition wealth from generation to generation.

With Lincoln Wealth Pass, protected annual income begins immediately, and continues until the full investment is returned over the annuity owner’s life expectancy, provided they are still living. If there is account value remaining upon the death of the owner, any remaining protected annual income payments can continue to their beneficiary, until the initial protected inheritance amount is zero.

“This estate planning strategy is a compelling option to help clients guarantee their inheritance through the protection and market growth potential an annuity can help provide,” says John Kennedy, head of Retirement Solutions Distribution at Lincoln Financial Distributors. “We continue to build out our broad portfolio of annuity solutions to help meet the needs any saver might face during and approaching retirement. Lincoln Wealth Pass adds to the depth and breadth of our offering, providing a unique option for wealth transfer.”

«