Auto Plan Features Biggest Influence on Retirement Marketplace

Advisers predict that auto enrollment and auto deferral increases are the two principal features most likely to shape the retirement marketplace over the next three years.

The Pension Protection Act and growth of the defined contribution marketplace is viewed as a business expansion opportunity by advisers. Advisers say that 75% of their plan sponsor clients will add an auto enrollment feature within the next two years, according to a survey of advisers serving the retirement market by Putnam Investments. However, two of every five sponsors are resisting its use over concerns about increased matching contribution and profit sharing costs resulting from the anticipated rise in enrollment.

For their clients who do implement auto enrollment, the 525 advisers surveyed are recommending a variety of default investment options. Eighty percent of advisers said they recommend target date funds; 65% risk-based lifestyle funds; and 63% balanced mutual funds. Only 13% of respondents said they are waiting for final Department of Labor guidance on Qualified Default Investment Alternatives (QDIAs). Open architecture within bundled plans is a critical must-have, according to the survey.

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Sixty percent of advisers say their clients have sufficient information related to plan fees, but they still rely on advisers for help, and half of the advisers say that they serve as fiduciaries to the plans they manage.

“Our 401(k) advisors strongly agree that auto features will be one of the dominant drivers of increased retirement savings, but the hurdle of perceived added program costs means that many plan sponsors will not provide these features to their employees,” said David Tyrie, Managing Director, Director of Retirement Services, Putnam Investments, in a press release about the study. “What’s clear, too, from our poll is that the role of the advisor is critically important long after the plan has been implemented, since plan sponsors continue to be reliant on their advisors for assistance and insight related to numerous operational and administrative plan issues.”

New Claymore ETF Offers Easy Access to Global Luxury Market

Claymore Securities, Inc. on Monday launched the Claymore/Robb Report Global Luxury Index ETF (exchange-traded fund) on the New York Stock Exchange.

The new ETF tracks an index that is designed to capture the opportunity created by companies whose primary business is the provision of global luxury goods and services, according to a Claymore press release.

The 2007 World Wealth Report issued recently by Merrill Lynch and Capgemini revealed that as high net worth individuals develop an increasingly more global outlook with diversified interests, “investments of passion’ have become an important portfolio allocation (See Wealthy Investors Include Investments of Passion in Portfolios).

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The Claymore/Robb Report Global Luxury Index ETF seeks investment results that correspond generally to the performance, before the fund’s fees and expenses, of an equity index called the Robb Report Global Luxury Index, the announcement said. The Index is comprised of no fewer than 20 and up to 100 equity securities traded on major global developed market exchanges, as well as American depositary receipts (ADRs) and global depositary receipts (GDRs) of companies whose primary business is the provision of global luxury goods and services.

The companies may include retailers, manufacturers (which may include automobiles, boats, aircraft, and consumer electronics), travel and leisure firms, and investment and other professional services firms. The designation of such firms as “luxury’ is determined by the publisher of the Robb Report magazine, CurtCo Robb Media, LLC. The index constituents are weighted using a modified market cap weighting methodology, and the index is rebalanced annually.

“[W]ith the introduction of the Claymore/Robb Report Global Luxury Index ETF, investors can now access the global luxury market in an efficient and transparent ETF,’ said Christian Magoon, Senior Managing Director and head of the ETF Group for Claymore Securities, Inc., in the release.

For more information, call 630-463-4000 or visit www.claymore.com/etfs.

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