iJoin Creates Managed Account Program

iJoin has introduced its Managed Account Program (MAP), which it says provides financial advisers an evolved, “manage it for me” investing option for retirement plan participants.

Founded on liability-driven investing principles, iJoin’s goal-based MAP personalizes recommendations based on each person’s age, income, savings and dozens of other known data points to achieve retirement income sufficiency.

At the discretion of the plan adviser and plan sponsor, iJoin‘s MAP may be implemented as the plan’s qualified default investment alternative (QDIA), providing Employee Retirement Income Security Act (ERISA) 3(38) fiduciary protection to both the plan and participants. In doing so, the plan sponsor simultaneously obtains safe harbor protection by conducting a re-enrollment event, the firm says.

The product assigns, monitors and updates the investment strategy for each investor based on market performance, accumulated savings, contribution rates and other factors. The approach is designed to accommodate a retirement plan’s existing investment lineup and 3(38) investment manager. The core logic may be applied to investment lineups seeking to achieve a target rate of return or an expected rate of return.

The program applies a liability-driven investment methodology in modeling each person’s retirement funding need, defined as the cost of an annuity that would yield the desired retirement income. iJoin’s calculations use market annuity prices to fund inflation-adjusted, lifetime retirement income. The calculator also incorporates external income sources such as Social Security, outside pensions and other savings.

Ameritas Launches Glide-Path Tool for Employer-Sponsored Plans

Ameritas has launched a new glide path strategy for employer-sponsored retirement plans called RetireExpress.

RetireExpressis said to offer a personalized, yet simplified, investment approach based on age, location, account balance and other individual factors. The integration of this glide path strategy will allow participants the potential to achieve retirement goals and reduce financial insecurity by allocating investments to be more conservative with age.

In addition to RetireExpress, the Ameritas retirement plans division recently launched a new plan sponsor website, an enhanced back-end customer support system and optimized fee management and billing support. Later this year, plan sponsors will have the option to outsource administrative burdens through SimpleAdmin from Ameritas.

The Markets March 12, 2020

Bear Markets Offer Annuity Education Opportunity

The U.S. stock market has entered bear market territory after its record bull run; one silver lining is the opportunity to educate people about annuities.

Reported by

John Manganaro

Investors hoping for a reprieve from the significant negative market volatility experienced by the S&P 500 and the Dow Jones Industrial Average indices in recent weeks have been disappointed by another streak of sharp losses on Wall Street.

The approximately 20% overall drop experienced so far by the U.S. markets is causing significant pain and worry for retirement plan investors—particularly those in the “retirement red zone.” But as Barbara Delaney, principal at StoneStreet Renaissance LLC, points out, there is at least one small silver lining.

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“One thing that you can say positively about a bear market is that it creates a reality check for everyone, particularly when you have so many people approaching retirement and so many assets in target-date funds [TDFs],” Delaney says. “Comparing this down market with the Great Recession, we still see that the bond markets are behaving more or less as they should, which is a consolation compared with what happened in 2008. But the losses are obviously making people think—how can I protect myself and do I really feel comfortable without any income guarantees?”

Delaney feels this particular bout of negative market volatility, coming as it does on the heels of the passage of the Setting Every Community Up for Retirement Enhancement (SECURE) Act, presents an important learning opportunity about the role of annuities. For context, the law includes among its many retirement-focused provisions multiple elements designed to increase the use of annuities in workplace retirement plans, such as an annuity selection safe harbor for plan sponsors and a requirement for annuity products to be made more “portable.”

“Clearly, people in our industry are starting to realize how much 401(k) plan participants need guarantees as they are approaching retirement or are already in retirement,” Delaney says. “We have an opportunity as advisers and plan sponsors to educate people about the institutional annuity landscape and to have a very important conversation about risk tolerance and guaranteed income.”

Delaney says that when annuities are explained in terms of maximizing income and driving happiness and confidence, people respond well. She also notes that the institutional annuity product set has expanded meaningfully in recent years—and many products now include the types of early death cash refund provisions that many annuity-skeptic investors say they want.

A recent BlackRock report underscores the need for annuity education in the defined contribution (DC) plan industry, pointing to various areas where participants’ annuity knowledge is lacking. On the one hand, the survey data tends to show that participants are interested in “guaranteed income solutions,” but at the same time, people commonly voice negative views of “annuities.” As such, even when progressive plan sponsors have made high quality, institutionally priced annuity products available in their plans, there has been quite modest uptake.

When they do choose guaranteed income, the surveys suggest that investors are more satisfied than those who try to manage retirement spending on their own, the BlackRock report says. Similarly, an older MetLife study found that nearly every traditional pension plan participant surveyed who took monthly income payments instead of a lump sum payment was happy with their choice. The same study found nearly one-third who took a lump sum regretted their first-year spending habits.