Products October 15, 2014

BOLD Campaign Provides Step-By-Step Financial Planning

Securian Financial group has unleashed a campaign called BOLD, for “Business Owner Life-stage Design,” that helps advisers address and plan for the many financial needs of small business owners.
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The campaign presents a framework for streamlining a business owners’ financial priorities into a set of personal and business “lifecycles,” which are then supported by the adviser. The personal side encompasses things like personal retirement income and estate planning, while the business side includes administration of retirement plans, executive compensation, key person protection, and succession issues. 

A second aspect of BOLD is an informal valuation of client businesses, known as the “Business Benchmark,” which helps the small business owner develop a realistic view of what their firm might be worth.

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Securian says it has recently conducted research among 500 small business owners, showing that while one-third of small business owners plan to leave their business in the next five years and 60% plan to leave in 10 years, many do not have any formal exit plans. The BOLD campaign addresses this important concern, Securian says.

More information on BOLD and other Securian servcies is at www.securian.com.

The Markets October 15, 2014

No Strong Participant Reaction to Market Swings

While all of the major asset classes suffered losses during the month of September, Aon Hewitt’s 401(k) Index shows light trading by 401(k) plan participants.
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Only about 0.021% of 401(k) balances transferred in September, marking the 11th consecutive month that trading activity was below 0.03%. Total transfer activity was $297 million, with two days having above normal trading activity, according to Aon Hewitt. 

Plan participants favored equity funds over fixed-income funds for 55% of the trading days in September, a reversal from August, when participants favored fixed-income investments on 65% of the month’s trading days. Overall, transfer activity moved away from diversified equities (equity assets excluding company stock) by $101 million (0.06%). For the quarter ending September 30, 51% of trading days favored equity funds, Aon Hewitt says. 

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Lifestyle and premixed funds saw the most inflows with $129 million (44%), while large U.S. equity funds received $59 million (20%) and international funds took in $36 million (12%). Company stock funds led net outflow activity with -$212 million (71%), followed by small U.S. equity and mid-cap U.S. equity with -$45 million (15%) and -$34 million (11%), respectively, transferring out for the month.

After incorporating trading and market activity, participants’ overall allocation to equities decreased marginally to 65.5% from 65.9% last month, the index shows. Future contributions to equities increased marginally to 67.0% from 66.5%.

The domestic equity markets struggled in September, as the S&P 500 Index returned -1.4% during the period. Small cap U.S. stocks, as measured by the Russell 2000 Index, lagged their large cap counterparts, returning -6.1%. Non-U.S. equities, as measured by the MSCI All Country World ex-U.S. Index, decreased by -4.8%. After posting seven consecutive months of positive performance, the MSCI Emerging Markets Index was the worst performing index in September, posting a return of -7.4%. The Barclays U.S. Aggregate Index, a measure of the fixed-income market, also posted negative performance during the month with a return of -0.7% as the 10-Year Treasury yield interest rates increased.

While volatility increased in the equities markets in the third quarter, very little money was transferred, with an average net activity of 0.20% of balances and just three days above normal trading levels. On the equity front, September reversed almost all of the gains of July and August, with the S&P 500 posting a slightly positive return of 1.1%. 

U.S. small cap stocks underperformed their large cap counterparts during the period, as the Russell 2000 Index lost -7.4%. Non-U.S. stocks lost ground in the quarter as the MSCI All Country World ex-U.S. Index and the MSCI Emerging Markets Index decreased by -5.3% and -3.5%, respectively. U.S. bonds, as measured by the Barclays U.S. Aggregate Index, were able to eke out a small gain during the quarter, Aon Hewitt says, returning 0.2%.

Aon Hewitt’s September 401(k) Index observations are available on its website.

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