Efficient Market Advisors, an exchange-traded fund (ETF) separate
account manager, is offering professionally
managed portfolios οf ETFs to 403(b) plans.
The offering is registered wіtһ 403bCompare.com,
tһе California School Employee Retirement Product Information Bank. Efficient Market Advisors worked wіtһ FOLIOfn Institutional, an online
brokerage аחԁ technology firm fοr financial intermediaries. FOLIOfn
Institutional will provide trading, clearing, аחԁ custody services..
The offering features the Folio
Investing system tһаt allows individuals οr institutions tο сrеаtе аnԁ manage diversified portfolios. The announcement said
features include:
The ERISA Industry Committee (ERIC) submitted comments to the Department of Labor’s Employee Benefits
Security Administration (EBSA) regarding its proposal on target-date fund disclosures.
While noting that ERIC “strongly
supports the goal of making sufficient information available to
participants to make informed investment decisions,” ERIC said that its
letter contends that the desire to provide more information “must be
balanced against the risk of information overload, as well as the cost
and effort required to prepare more information than participants will
or can utilize.”
ERIC President Mark Ugoretz cautioned
that “Inundating participants with excessive information has serious
consequences; too often it results in participants simply ignoring
critical information that is overcome by excessive data.” The ERISA Industry Committee
(ERIC) is a non-profit association that describes itself as “committed
to representing the advancement of the employee retirement, health, and
compensation plans of America’s largest employers.”
ERIC acknowledged that the measure
of information provided to participants is particularly important in
participant-directed plans “where the responsibility for balancing
personal risks, and making adjustments as personal circumstances change,
falls on the participant,” and that “No investment alternative (target
date fund or otherwise) is designed to relieve a participant of this
responsibility.Accordingly, it is critical that the disclosure requirements be calibrated to keep participants engaged.”
To get the proper measure, ERIC
recommended that qualified default investment alternatives (QDIAs) and
target-date funds (TDFs) not be singled out for disclosure of
information that is also relevant for other investment alternatives.In
fact, ERIC urged that, at a minimum, the required statements should
recognize that “the risks associated with TDFs are comparable to the
risks inherent in most other investments.”
In addition, ERIC contends that the final
regulation should allow required disclosures for QDIAs and TDFs to be
incorporated by reference to the same extent permitted by the final
participant disclosure regulation, and should clarify that plans may
combine QDIA notices with other required disclosures.
(Cont...)
ERIC
recommended that the final regulation should include model disclosures
“in order to improve consistency, quality, and efficiency," and that a
model QDIA notice “should expand on the existing model automatic
enrollment notice by illustrating the level of detail that is
appropriate, and should be drafted in a straightforward and replicable
format, similar to the Model Comparative Chart included in the final
participant disclosure regulation."
ERIC
also recommended that the final regulation should clarify that the
requirement to explain a TDF’s asset allocation can be satisfied by
describing the design of the TDF, without getting into minute details
regarding the underlying funds.“Although TDFs generally
have designs and strategies that can be described succinctly, most fund
managers retain the flexibility to adjust the underlying investments and
asset mix at any time," the letter explains.ERIC
contends that this flexibility is important because it enables fund
managers to react efficiently to market events and changed
circumstances, without the need for constant updates to the disclosure
materials.
ERIC
also suggests eliminating a requirement contained in the proposed
regulations to explain assumptions about a participant’s contribution or
withdrawal intentions.The letter contends that an
explanation of assumptions about what a participant or beneficiary
intends to do after the target date is not necessary and, according to
ERIC, “incorrectly implies that knowledge or expectations about an
individual’s future behavior are (or should be) considered in the design
or selection of TDFs."
The
regulation would still require a description of the underlying asset
classes; the glidepath; the landing point; the risks; the age group for
whom the TDF is designed; and the relevance of the target date.ERIC contends that this information should be sufficient to help participants understand the TDF alternative.
Among ERIC’s other recommendations are that the final regulation should:
Not
require disclosure of any information that is not also subject to
disclosure under SEC rules, including existing SEC regulations and the
advertising rules currently being developed.
Include more detail on the proposed requirement to disclose historical performance data.
Allow more incorporation by reference to a website to help reduce the cost of compliance.
Not
be effective before the later of 180 days after the final rule is
published in the Federal Register, or the first plan year that starts on
or after November 1, 2011.