In Practice October 26, 2012

AllianceBernstein Puts Advisers in ‘Fast Track’

AllianceBernstein enhanced its FastTrack presentation with new data and input from plan sponsors and plan participants.
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Marketed to advisers, AllianceBernstein Retirement FastTrack—the name identifies it as a retirement program, says Todd Mann, director and institutional retirement specialist at AllianceBernstein—is intended to put advisers in the retirement business fast track, relative to their competitors.

At a retirement solutions forum, Mann discussed ways for advisers to accelerate the retirement portion of their business. Slightly over half of participants at the event (53%) deal with plans under $10 million; 34% deal with plans in the range of $10 million to $50 million, and 12% deal with plans over $50 million.

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According to Mann, there are 320,000 advisers nationwide, but the defined contribution (DC) landscape is dominated by a very small group of advisers. A majority of those surveyed (81%) said more than 40% of their revenues come from DC sales; 15% said DC plans account for 20% to 40% of revenues; and just 4% said less than 20% of revenues are in DC plans.

More advisers are gravitating toward retirement as a business line, Mann said, and many advisers are assembling teams to be able to address corporate retirement clients. According to Mann, research shows that plan sponsors need support from advisers in the form of investment review services, keeping up to date with regulation, and participant education.

When working with advisers, plan sponsors value reasonable fees and quick responses. Those sponsors who have participated in a FastTrack presentation say it provides a refreshing and different way to review their retirement plan, Mann told PLANADVISER.

The program gives sponsors immediate feedback and allows them to address any issues and get their plan to perform better. FastTrack also enables a plan sponsor to understand their firm’s plan relative to other plan sponsors. Sponsors are given the latest research on their colleagues across the country, Mann said, including data on pension and defined benefit (DB) plans, but it is clear that the trend is in DC plans.

 

 

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“The program allows sponsors to review all critical areas of their plan,” Mann said, “including fiduciary obligations, fees, investments, communications, service and overall plan goals.”

Additional value comes from hearing the thoughts of other plan sponsors about the issues that concern them, and the chance to gather information that will allow sponsors to create custom benchmarking and determine the relevant next steps to allow them to raise the bar for their plan.

“When reviewing the customized benchmark report, plan sponsors are able to determine how their plan stacks ups against other plans nationally, and from there they can develop an ongoing action plan to close gaps where needed,” Mann said.

AllianceBernstein recommends the presentation have three speakers: an ERISA attorney or a CPA that does auditing; the plan sponsor, who can partner with Todd Mann; and a Department of Labor (DOL) representative, which will help increase attendance. Two DOL presentations that have proven quite popular are fiduciary best practices and fee disclosure, Mann said. The seminar must also have some nonprofit component, such as a human resources or medical organization, for the DOL to be involved.

The program length is about two to three hours, based on about an hour per speaker. Mann said he can do his part in half an hour, if there are time constraints. The program is generally organized with about three months’ lead time, and Mann does only three to four per quarter, so that an area does not get saturated. The presentation is intended for clients or for prospects, or, Mann says, even both at the same presentation. “Clients can talk to the prospects and tell them how great it is working with the adviser,” he said.

The venue itself deserves consideration. Mann said they have had a lot of success conducting FastTrack at education institutions, and he recommends a local college instead of a hotel. “It adds another dimension,” he said.

In case attendees are spread out across the country, FastTrack is available as a webinar.

More information is available at Alliance Bernstein.

 


 

Data & Research October 26, 2012

Age, Account Balance Affect Allocation

The investment allocation of individual retirement accounts (IRAs) varies according to several factors, but the difference between genders is minimal.
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According to an EBRI report, those older, having higher account balances, or owning a traditional IRA that originated as a rollover had, on average, lower allocations to equities, according to the report, which notes that as account balances increased, the percentages of assets in equities (i.e., direct ownership, mutual funds, etc.) and balanced funds (including target-date funds) combined decreased, while bond (i.e., direct ownership, mutual funds, etc.) and “other” (i.e., real estate, annuities, etc.) assets’ shares increased.

Equity allocations for the youngest IRA owners (younger than age 35) with small account balances were the lowest across the age groups. However, when balances reached $10,000 or more, younger IRA owners had significant increases in equity allocations, such that those ages 25 to 34 with the largest account balances had the largest equity allocation.

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“Those under age 45 were much more likely to use balanced funds than were older IRA owners, and those under age 35 with balances less than $25,000 had particularly higher allocations to balanced funds,” noted Craig Copeland, EBRI senior research associate and author of the report. “This shift follows the standard investing ‘rule of thumb’ that individuals should reduce their allocation to assets with high variability in returns (equities) as they age.”

Roth IRAs had the highest share of assets in equities (59.1%) and balanced funds (15.5%). Traditional-originating from rollovers IRAs had the lowest percentage in equities (at 41.3%), but also had the highest percentage of assets in money (12.8%) and the highest percentage in bonds. Roth IRA owners were also much more likely to have 90% or more of their account invested in equities than owners of the other IRA types. IRA owners who also were ages 35 to 44 or had account balances of less than $10,000 were more likely to have extreme allocations (more than 90%) to equities.

Overall, as of year-end 2010, about 46% of total IRA assets were in equities, 20% in bonds, 11% in balanced funds, 9% in money and 15% in “other” investments.

These and other findings come from the latest update of the EBRI IRA Database, an ongoing project by EBRI that currently contains information about 14.85 million accounts of 11.1 million unique individuals with total assets of $1.002 trillion, as of year-end 2010. Full results are published in the October 2012 EBRI Notes at www.ebri.org.

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