Data & Research July 30, 2012

DC Participants Stay the Course in 1Q

Only 1% of defined contribution (DC) plan participants stopped contributing to their plans, and 1.2% took withdrawals in the first quarter, a report found. 
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These figures exactly matched data for the first quarter of 2011, the Investment Company Institute (ICI) report revealed. In the first quarter of 2010, slightly more people (1.1%) stopped contributing to their DC plan. “It is possible that some of these participants stopped contributing because they reached the annual contribution limit,” the ICI said.

As far as hardship withdrawals were concerned, the number also held steady, with 0.4% of plan participants taking out hardship withdrawals in the first quarter, on par with the first quarter of 2011. “The withdrawal and contribution data indicate that essentially all DC plan participants continued to save in their retirement plans at work,” the ICI said.

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Nonetheless, the Institute added, “loan activity continues to remain elevated compared with four years ago. At the end of March 2012, 17.9% of DC plan participants had loans outstanding, compared with 15.3% at year-end 2008. This pattern of activity was also observed in the wake of the bear market and recession earlier in the decade.”

The ICI also noted that few investors changed their portfolios in the first quarter, as the S&P 500 Index rose 12.6%; only 4% changed the asset allocation of their balances, and 4.2% changed the asset allocation of their contributions. “These levels of reallocation activity were similar to the reallocation activity observed in the same time frame a year earlier,” the ICI said.

The ICI data was based on recordkeeping data from 24 million accounts in a variety of DC plans.

Data & Research July 27, 2012

M&A Deal Flow Stayed Steady in First Half

The first half of 2012 saw 25 deals completed, totaling about $36.2 billion in assets under management, according to Schwab Advisor Services Reports.
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Industrywide data on registered investment adviser (RIA) mergers and acquisition (M&A) activity from Schwab details total transactions and average deal assets under management (AUM) for the first half of the year.

“RIA M&A deal flow has remained steady during the first half of 2012, recording just slightly fewer transactions than the same period last year,” said Jon Beatty, senior vice president, sales and relationship management, Schwab Advisor Services. “While the second quarter slowed a bit in terms of the number of completed transactions, we’ve seen a big jump in the average deal size so far this year, indicating the overall strength of the RIA segment.”

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Highlights include:

 

  • The average deal had assets under management of $1.4 billion;
  • Eight completed transactions in the second quarter for a total of $12.3 billion in AUM; and
  • National acquiring firms are the dominant buyer category, closing three transactions in the second quarter and approximately 50% of the total deals since the fourth quarter of 2011.

Schwab’s M&A data focused on investment advisory firms that predominantly serve high-net-worth retail investors, firms with at least $50 million in AUM and breakaway brokers from wirehouses who received consideration for joining an RIA.

Schwab began tracking M&A transactions in 2004.

 

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