Products September 19, 2019

Investment Product and Service Launches

John Hancock to offer Morningstar adviser managed account services; Franklin Templeton expands active fixed income ETF suite; and industry veterans form equity strategy firm. 

Reported by
Art by Jackson Epstein

Art by Jackson Epstein

John Hancock to Offer Morningstar Adviser Managed Account Services

John Hancock Retirement has signed an agreement with Morningstar Investment Management LLC to offer Morningstar’s adviser managed account services to registered investment adviser (RIA) firms and their advisers for their retirement plan clients. Piloting in Q1 2020, John Hancock expects to roll out the offering more broadly during 2020.

With the Morningstar adviser managed account services, retirement plan participants receive personalized advice based on model portfolios aligned with the RIA firm’s investment expertise and philosophies. This goals-based program considers, among many factors, each participant’s age, salary, account balance, contribution rate, gender, risk capacity, as well as tax and plan rules to help them achieve their personal retirement goals. The adviser managed account program can also help RIA firms generate new business opportunities, while enabling advisers to offer scalable, personalized advice.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

“This agreement represents another step in the evolution of our advice offering,” says Patrick Murphy, CEO, John Hancock Retirement. “We’re building on a 15-year relationship with Morningstar, which started with our single proprietary managed account product. Our new offering leverages the adviser community’s expertise and ultimately enables us to help a greater number of participants reach their retirement goals.”

Franklin Templeton Expands Active Fixed Income ETF Suite 

Franklin Templeton has expanded its active fixed income exchange-traded fund (ETF) lineup with the addition of Franklin Liberty U.S. Core Bond ETF (FLCB), which seeks to provide investors with diversified core fixed income exposure. FLCB is an active ETF that seeks total return through bottom-up fundamental bond selection and top-down sector allocation and is listed on the New York Stock Exchange (NYSE) Arca. 

“We believe active management is critical for achieving long-term returns and managing investment risk, particularly in multi-sector investment grade fixed income,” says Patrick O’Connor, global head of ETFs for Franklin Templeton. “We are thrilled to launch FLCB, which can serve as a core, building block allocation in an investor’s portfolio.” 

Franklin Templeton’s fixed income and quantitative research teams review issuers and assess risks from multiple perspectives, which results in viewpoints on each potential investment. FLCB will be managed by David Yuen, SVP, head of quantitative and multi-sector strategies, Amy Cooper, VP, portfolio manager, Patrick Klein, SVP, portfolio manager, multi-sector strategies, and Tina Chou, VP, portfolio manager, with Franklin Templeton Fixed Income Group.

“The investment team has chosen to manage this fund with a low tracking error to the Bloomberg Barclays U.S. Aggregate Bond Index but has the flexibility to derive alpha through active sector allocation and security selection, providing a truly active core fixed income ETF,” adds O’Connor.

Franklin LibertyShares active fixed income ETF strategies include: Franklin Liberty U.S. Core Bond ETF; Franklin Liberty Investment Grade Corporate ETF; Franklin Liberty Short Duration U.S. Government ETF; Franklin Liberty Municipal Bond ETF; Franklin Liberty Intermediate Municipal Opportunities ETF; Franklin Liberty High Yield Corporate ETF; Franklin Liberty International Aggregate Bond ETF; and Franklin Liberty Senior Loan ETF. 

Industry Veterans Form Equity Strategy Firm 

Cinctive Capital Management (Cinctive) has launched with $1 billion in commitments from multiple investors, including a partnership with leading institutional investors the Employees Retirement System of Texas (ERS) and PAAMCO Launchpad, a subsidiary of PAAMCO Prisma. 

Cinctive, founded by alternative asset industry veterans Richard Schimel and Lawrence Sapanski, is focused on long/short equity strategies.  The firm employs a multi-manager investment approach with sector teams practicing fundamental stock picking and incorporating proprietary quantitative tools backed by a robust approach to risk management.  The firm currently has 11 portfolio managers. 

“Our approach represents a new, evolved version of the multi-manager platform model,” says Schimel, co-founder and co-chief investment officer of Cinctive. “We think our model, which allows portfolio managers the ability to focus on their best ideas and offers incentives based on quality of returns, not the amount of capital allocated, more clearly aligns investor interests with ours. We have a robust pipeline of seasoned investment teams and are in the process of further expanding our capabilities.” 

Robeco Adds Emerging Markets ESG Strategy 

Robeco has launched Robeco Sustainable Emerging Stars Equities. The newly launched high-conviction strategy will reportedly hold a better environmental, social and governance (ESG) profile and environmental footprint than its benchmark (MSCI Emerging Markets Index), while aiming to generate above-benchmark returns. The concentrated portfolio will consist of approximately 35 to 50 holdings, resulting in an active share of above 80%, according to Robeco. 

The strategy selects companies from a sustainable investment universe based on top-down country analysis and bottom-up stock ideas, and also includes voting and engagement, which will be carried out by Robeco’s Active Ownership team. It is also an addition to Robeco’s existing fundamentally managed ‘Stars’ strategy range, consisting of concentrated, high-conviction portfolios.

Jaap van der Hart and Fabiana Fedeli, members of Robeco’s Emerging Market Equity team, will be managing the strategy. 

Fabiana Fedeli, global head of Fundamental Equities and portfolio manager of Robeco Sustainable Emerging Stars Equities, says, “We are excited to launch this new strategy, which builds on and complements our existing emerging markets strategies. Our long history and experience of investing in emerging markets enable us to offer clients a strategy that takes high-conviction positions. This, combined with our leading global position in sustainable investing, makes us confident that we have a great solution for our clients, as we look to achieve their financial and sustainability goals and strive to deliver superior investment returns.”   

The Robeco Sustainable Emerging Stars Equities strategy is available to institutional investors in the United States and Canada, among other key markets.

Client Service September 19, 2019

PANC 2019: Health Savings Accounts as a Retirement Planning Vehicle

Increasingly, HSAs are being viewed, accepted, and treated in the industry, as a long-term investment strategy.

Reported by

From left: Gregory F. Adams, Fiduciary Investment Advisors; Larry Bohrer, Charles Schwab & Co.; and John Manganaro, PLANADVISER. Photograph by Matt Kalinowski.


Larry Bohrer, vice president, corporate brokerage retirement services at Charles Schwab & Co. Inc., reminded us on Day Two of the 2019 PLANADVISER National Conference (PANC) that, unfortunately, each retiree will be facing about $300,000 in medical expenses. Health care costs are expected to rise 5.5% annually; therefore, upkeep on retirees’ health may be their largest expense. These statistics are from the most recent Devenir HSA [Health Savings Account] Market Survey.

But, reminiscent of the defined contribution (DC) marketplace in its early years, the growth rate of employees using HSAs is 20% per year, Bohrer said.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

There’s an increasing awareness of the accounts by plan sponsors and participants, he said. “The tax benefits inside an HSA are better than in a 401(k). HSAs have a triple tax benefit and are portable, unlike flexible spending accounts [FSAs]. One of the lesser known benefits of having an HSA is that it lets people reimburse themselves for out-of-pocket medical expenses over an employee’s lifetime—if receipts are available.”

Gregory F. Adams, a consultant with Fiduciary Investment Advisors LLC, outlined the generally recommended hierarchy of savings: For starters, one should contribute enough to his DC plan to receive the employer match. If the person has a high-deductible health plan (HDHP), and it’s linked to an HSA, his next dollars should go to maxing out the HSA, per his annual IRS savings contribution limit, and after that into the DC plan.

Why aren’t HSAs seen as a long-term investment tool? “Twenty-two million people have invested funds in their HSA,” Adams said. “There’s an incredible range of investments, brokerage windows, money markets available, but there is still a huge gap in participant understanding that HSAs can have a long-term strategy.”

For instance, he said, parents of Millennials don’t talk about HSAs. “They still think ‘401(k) only’ when it comes to retirement savings.”

According to Bohrer, employers can save money by changing to an HDHP health plan, allowing employees the option to save in an HSA. An HSA, he noted, is like an individual retirement plan (IRA) for health care. 

Many recordkeepers are establishing their own platform for the accounts. Others have established partnerships, and some recordkeepers simply have HSA data integration. This is all being driven by employers seeing HSAs as a retirement savings account.

Interestingly, Adams, who is far down the road with HSA services offered, is getting ahead of regulatory bodies. “HSAs are taking the same path as 401(k) and 403(b) plans took 20 years ago,” he observed. “There are lots of vendors in the space, hidden fees, different restrictions, investment funds that are proprietary or not proprietary. We feel that, as HSA assets grow, regulatory bodies such as the IRS and the Department of Labor [DOL] will get more involved. We’re looking at RFPs [requests for proposals] for finding the right providers and documenting why we’re choosing the vendors we choose. We’re performing the due diligence so there are no compliance issues later on.”

«