Products June 5, 2017

Fiduciary Benchmarks Launches IRA Best Interest Determination Service

Fiduciary Benchmarks is planning to launch a series of services in response to the DOL’s conflict of interest rule.
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Ahead of the Department of Labor (DOL)’s fiduciary rule implementation, Fiduciary Benchmarks is launching a suite of tools to help advisers comply with the legislation set to take effect June 9. 

First, FBi released an IRA Rollover Service addressing the requirements of the Fiduciary Rule and FINRA 13-45. The firm plans to follow this release with the launch of IRA Benchmarking, level fee vs. commission analysis and additional compliance work flows.

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“We prioritized the IRA Rollover service first as that was clearly the biggest need for our client base—and as noted in the DOL Best Interest preamble, the rollover decision will be the most important financial decisions that many consumers make in their lifetime,” explains Craig Rosenthal, senior vice president of Advisor Sales & Service. “With respect to IRA benchmarking, we decided that given the rate of change to pricing and products in response to the fiduciary rule that it would be best to let things settle before moving onto IRA benchmarking, which is now scheduled for a October launch.”

CEO Tom Kmak adds, “We are very excited to bring this service to the marketplace. We have demonstrated the system to over 200 different companies and we have listened carefully to their thoughts and comments while staying true to our vision to always look at more than just fees. In fact, the decision making algorithm considers 16 different issues in a simple one-page format that is completely consistent with FINRA 13-45 and the Fiduciary Rule. The system also handles three different types of transactions for rollovers: recommendations, education or an unsolicited request. This flexibility allows our clients to use the service in every market segment of their institution: high net worth, asset management, and their retail divisions.”

The firm plans to leverage its existing patented method and technology from its DC plan benchmarking suite of services.

Data & Research June 5, 2017

Nearly Half of Large Plan Sponsors Tracking Retirement Readiness

Ninety-nine percent believe they have a responsibility to help their employees prepare for retirement.
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Large plan sponsors, those managing assets of $100 million or more, are increasingly looking to help their employees through their retirement years, T. Rowe Price found in a telephone and online survey of 269 executives late last year.

Ninety-nine percent believe they have a responsibility to help their employees prepare for retirement, and 41% say that helping retirees manage income from their 401(k) is a major strategic goal for their plan. Fifty-two percent are allowing terminated employees to take partial withdrawals from their plan.

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Nearly half, 48%, are tracking the retirement preparedness of their employees. This proactive group is also more likely to use auto escalation of deferral rates (63% versus 52% of those not tracking retirement preparedness) and re-enrollment (55% versus 41%).

“Plan sponsors’ behaviors and attitudes clearly indicate the seriousness with which they take responsibility for the retirement security of their plan participants,” says Ann Coveney, senior manager of retirement thought leadership at T. Rowe Price. “More than a savings plan during working years, the 401(k) is increasingly seen as a plan that needs to serve employees during their retirement.”

Among those tracking employees’ retirement preparedness, 52% indicate that metric was provided by their recordkeeper, 25% report using a proprietary metric they developed on their own, and 21% sourced the metric from their consultant or adviser.

Nearly two-thirds (64%) feel better about 401(k) participant retirement preparedness compared with two years ago. But the third-ranked major 401(k) plan goal is enabling employees to retire at their preferred retirement date, which was indicated by 64% of sponsors. T. Rowe Price says this is a clear indication that employers are looking ahead to workplace management so that their employees will be able to retire in a timely fashion and younger employees will be able to be promoted.

NEXT: Company matches and target-date funds

Matching contributions are offered by 89% of plan sponsors; of that 89%, 51% offer a traditional matching formula and 38% offer a stretch match to encourage higher contribution rates.

Target-date funds are widely offered (83% of plan sponsors) and with high satisfaction; 96% to 98% are satisfied with the various types of target-date funds, with about 60% rating their satisfaction as very satisfied. Target-date funds serve as the qualified default investment alternative (QDIA) for 88% of plan sponsors that offer target-date funds. About half of plan sponsors that offer target-date funds report the funds are proprietary funds managed by their recordkeeper.

Despite plan sponsors’ progress with helping employees’ retirement preparedness, 70% say that leakage of retirement plan assets is a major or minor problem for their plans. To address this problem, plans are offering various programs, including financial wellness programs (offered by 58% of plans), education about the impact of leakage on account balances (53%) and debt management tools and services (47%).

T. Rowe Price’s full report, “Human Resources Perspective: A Survey of Larger 401(k) Plans,” can be downloaded here.

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