The Markets November 29, 2017

Active Managers Turn to Mixed Asset Class Products

Some are looking to build on proprietary investment models.

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Active managers are looking to redefine their space by creating more multi-asset-class products, according to the latest Cerulli Edge report. 

Twenty-six percent of active managers are building multi-asset-class funds. Of this group, 74% are based on fundamental active management, and the remaining 26% on factor-based management with portfolio manager discretion.

“Gone are the days of developing a basic 60% [equity]/40% [fixed income] balanced fund,” Cerulli says. “Managers’ new initiatives are focused on blending together existing capabilities in equity, fixed income and alternative asset classes to build an asset allocation strategy to serve as an all-inclusive solution for advisers’ portfolios.”

Fifty-eight percent of asset managers offer asset allocations based solely on their own funds, but 50% offer asset allocations based on their own funds plus outside managers. Twenty-one percent are considering developing new asset allocations and populating them with proprietary strategies.

“This approach is particularly intriguing for active managers,” Cerulli says, “because it provides an opportunity to showcase the multi-asset-class capabilities many have spent previous years sharpening.”

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Some firms are moving to create multi-asset-class capabilities in exchange-traded funds (ETFs), according to Cerulli, including actively managed multi-asset-class ETFs.

None of these multi-asset-class products fit into the traditional Morningstar style boxes, Cerulli says. Rather, many are being marketed as risk-based allocations. Among the managers looking to offer multi-asset-class solutions, 24% are planning to offer risk-based solutions in the next 12 months. The rest of the multi-asset-class solutions are focusing on other strategies, such as retirement income and multi-asset income.

These solutions will meet advisers’ expectations, Cerulli says, as 20% plan to increase their allocation to retirement income products to meet the needs of their older clientele.

Details on how to order Cerulli’s full report on multi-asset-class development can be found here.

Data & Research November 29, 2017

Despite Wanting Help, Many Employees Balk at Targeted Messages

Fifty-seven percent of employees surveyed do not want their employer to send personalized messages to people facing important financial decisions.

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After several years of American workers beginning to feel more financially secure following the Great Recession of 2008, this year, just 35% said they are satisfied with their financial situation, down from 48% two years ago, Willis Towers Watson found in a survey.

Just over one-third, 34%, said their financial concerns are negatively impacting their lives, up from 21% in 2015. Fifty-nine percent worry about their financial future, up from 49% two years ago.

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Only 47% are confident their will have enough money 25 years into retirement, and 57% think they will have enough resources 15 years into retirement. Ten percent have taken a loan from their 401(k) plan, and 6% have made a permanent hardship withdrawal.

The research also found that 53% of employees would like their employers to offer tools to help them improve their financial situation. However, 57% do not want their employer to send personalized messages to people facing important financial decisions, and 50% do not think it is the role of an employer to send personalized messages to people who are not saving enough for retirement.

“While employees are eager for their employers to provide support and technology that deliver valuable guidance and suggestions on retirement and financial decisions, employees are very wary of personalized outreach,” says Shane Bartling, senior consultant at Willis Towers Watson.

According to the survey results, 30% of respondents said they are worried about their short-term and long-term finances. Among this group, 31% said these worries are keeping them from doing their best at work. Thirty-seven percent reported they feel highly stressed, and another 33% indicated they feel above average stress. Thirty percent said their health is poor. Conversely, 35% of those without financial worries said they are in good health, and 55% reported they are in very good health.

Other financial concerns the survey found include:

  • Twenty percent said they fail to pay their credit card in full each month.
  • Only 31% of employees look at their budget on a regular basis.
  • Eighty-one percent said they are living paycheck to paycheck.
  • Twenty-four percent reported they have experienced a moderate financial hardship, and 13% indicated they have been hit with a severe financial hardship.
Willis Towers Watson surveyed more than 30,000 workers in 22 countries in July and August. Of those surveyed, 4,983 workers were in the U.S.

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