In Practice January 19, 2011

Attitude Toward SecLending Changing

Plan sponsors have begun to see securities lending as an investment product with risks and rewards like another other, according to a report from Finadium. 
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A Finadium news release about its plan sponsor attitude survey said sponsors have a “new level of nuanced thinking” regarding securities lending, collateral management, and custody providers.

When it comes to custody issues, plan sponsors recognize that reporting, performance measurement and accounting services are not free, and that the bill paid today rarely reflects the true cost of service delivery, the news release said.

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Other highlights include:

  • Liquidity in cash reinvestment markets is becoming a concern as new regulations constrict the availability of certain types of assets.
  • Plan sponsors are not against the idea of a securities lending agent lending to an affiliated prime broker, but are conscious of the credit risks this entails and would like greater transparency than they now receive about the process.
  • There appears to have been a reversal of plan sponsor interest towards separating securities lending and collateral management in the RFP. Bundling custody and securities lending however has become more attractive than in prior years.
  • More important than revenues, communication and client relationship management are now the most important criteria for what makes a good securities lending agent. 

The Finadium report is based on interviews and annual reports of 98 U.S. plan sponsors with more than $2.23 trillion in assets.

 

Products January 19, 2011

Principal Video Series Aims to Help Advisers Educate on NQDC

A new video series from the Principal Financial Group is designed to help advisers educate clients about nonqualified deferred compensation plans (NQDC).

 

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These plans, designed specifically to address the retention and retirement needs of key employees, can also help fill what can be a significant gap in retirement savings for more highly compensated workers.

“Financial professionals recognize that nonqualified deferred compensation plans provide an important additional retirement savings option for highly compensated key executives who are limited in how much they can efficiently put away through traditional employer-sponsored retirement plans,” said Andy Dalgliesh, director of nonqualified benefits consulting for The Principal. “But this may not be an area of specialty for many advisors who seek additional support in presenting these programs to employers. Our video series gives them a high-quality, ready-made educational tool with objective content in simple, straightforward terms.”

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The four videos in the series cover basic and advanced topics:

  • Making the case for nonqualified deferred compensation plans
  • Nonqualified deferred compensation plan design
  • Distributions from nonqualified deferred compensation plans, and
  • Section 409A correction programs

Financial professionals and consumers can access the videos on http://www.YouTube.com/principalfinancial.

 

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