Products June 28, 2012

App Lets Employees “Quick Enroll” in 401(k)

J.P. Morgan Retirement Plan Services launched a mobile application for 401(k) plan participants.   
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The app allows users to access key account information, including the estimated annual income the individual is on track to receive in retirement.

The app also includes a “quick enroll” feature, which allows non-participants to enroll in their employer-sponsored retirement plan with a date of birth, last five digits of a Social Security number and zip code. The individual will then be able to start contributing a specified amount to the plan’s default investment option, which is typically a target-date fund (TDF).

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Future account transactions require full authentication, but participants can move between the mobile experience and full web experience without authenticating again.

“Inertia is extremely powerful, and many individuals don’t overcome the obstacle of resetting a password,” said Donn Hess, managing director and head of product development for J.P. Morgan Retirement Plan Services. “In this case, individuals can attend 401(k) plan informational meetings and enroll before they even leave the room. We want to eliminate any barriers to saving.”
 

 

Data & Research June 28, 2012

More DB Sponsors Looking for Fiduciary Investment Managers

An SEI quick poll of 50 corporate defined benefit (DB) plan sponsors found 26% use a 3(38) fiduciary manager.

 

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Two-thirds (65%) of respondents currently use a 3(21) investment adviser, and 9% do not use an investment adviser at all. 

Of the poll participants who said they are not currently using a fiduciary manager, 29% said they would likely consider a change to this model within the next five years, potentially more than doubling the use of an outsourced fiduciary manager model by corporate pension plan sponsors by 2017.  

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According to the Employee Retirement Income Security Act (ERISA), an investment provider who assumes discretion is considered to be a 3(38) fiduciary manager. Other industry names for this model include investment outsourcing provider and outsourced chief investment officer (OCIO). In contrast, an investment provider who delivers advice only is considered to be an ERISA 3(21) investment adviser. An example of this model would be a traditional investment consultant.  

Poll participants currently using a 3(38) fiduciary manager said this model allows them to focus more on strategic issues, such as aligning investment decisions with corporate financial goals, and delegate tactical decisions, such as improving portfolio diversification. 
 

 

The top three strategic priorities identified by plan sponsors working with a fiduciary manager included developing new solutions to better control funded status volatility (82%); mitigating the potential impact of plan contributions on corporate finances (45%); and formulating a plan glide path with automatic triggers to capitalize on market swings and protect funded status (36%).  

With a continued low interest rate environment, the majority (55%) of poll participants currently using a 3(21) investment adviser also identified the need to develop new solutions to better control funded status volatility as the top priority in working with their investment advisers this year.    

Poll participants currently using an investment adviser identified a few top investment management priorities that differed from those currently working with an outsourced fiduciary manager.  More than one third (36%) of poll participants indicated the need for a process that allows them to execute faster on market changes. However, when asked their top reason for using an investment adviser, the majority (73%) of poll participants said they currently use this model even though they already have dedicated internal staff in place. This shows that many plan sponsors may have the staff, but still lack the capability of executing on market changes in a timely and effective way.    

Additionally, more than one-quarter (27%) said increasing the level and frequency of comprehensive strategic advice is a top priority for better plan management this year.  

Poll participants using an investment adviser said a loss of control in selecting managers is the main concern for their reluctance to use a fiduciary manager at this time.  

Complete poll results can be obtained by e-mailing seiresearch@seic.com.

 

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