In Practice November 28, 2007

Hiring in Financial Services Expected to Rise in 2008

Half of financial services firms plan to increase professional hiring in 2008.
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Less than one-third (29%) of financial firms planned on flat hiring and only 19% expected lower hiring in 2008, according to the “2008 Financial Services Talent Acquisition Survey” by Claymore Partners, an executive search and consulting firm specializing in the financial services arena.

The most in-demand positions by financial institutions in 2008 are information technology and sales positions. Information technology positions were also viewed as the most difficult function to fill by financial institutions despite the use increasing use of outsourced and offshore technology resources, Claymore said, in a press release. Additionally, financial services firms say they have difficulty filling the finance function.

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Nearly all (90%) of respondents indicated that the impact of the credit crisis on their 2008 hiring plans would be slight or have no impact. The only place where hiring appears to be impacted is in specific investment banking and mortgage firms, as well as areas that are deeply and directly impacted by the credit crisis. Those firms are reducing hiring plans in specific areas, Claymore says, but the impact does not seem to be wide spread at this point.

The 2008 Financial Services Talent Acquisition Survey was sent to over 350 human resources executives from leading financial service institutions across the USA. For more information on the findings from the survey, please contact Steven Landberg at slandberg@ClaymorePartners.com.

Data & Research November 27, 2007

Sponsors Searching for Ways to Boost Participation Rates

Automated retirement plan features such as automatic enrollment are driving up 401(k) plan participation rates at U.S. companies, according to Diversified Investment Advisors, Inc.
Reported by

Diversified said the number of U.S. companies with 1,000 to 4,999 employees that report a 90% or better participation rate in their company’s 401(k) plan has doubled since 2006. According to Diversified’s survey, 62% of corporate plan sponsors implemented or are currently implementing automatic enrollment – a 7% increase over last year – and another 30% reported they are considering making automatic enrollment part of their plan.

In addition, the survey found twice as many plan sponsors (30% versus 15% in 2006) have or are currently implementing automatic deferral increases. More plan sponsors are also offering automatic rebalancing (31% in 2007 versus 24% in 2006) and managed accounts (37% in 2007 versus 32% in 2006), according to a press release.

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Interaction with Employees

Diversified’s “Report on Retirement Plans – 2007” also indicated corporate plan sponsors conducted employee meetings (36%), improved their employer match (29%), and offered an enhanced array of investments (28%) in an effort to bolster plan participation.

Forty-seven percent of employers plan to improve employee education over the next year, while 28% plan to offer investment advice.

Plan Offerings

Eighty percent of employers surveyed offer 401(k) plans. Plan assets continue to grow as 92% of plans surveyed report assets of $25 million or more – a 9% increase over 2006. Nearly 90% of employers reported their DC plan has had at least some impact on their ability to recruit and retain the most qualified employees and one in four said it has had a major impact, the survey found.

With 40% of employers currently offering a 401(a) defined contribution plan, the popularity of these plans has increased since 2004 when only 11% of employers offered them.

Regarding DC plan annual fees, 39% of companies said they pay less than 20 basis points. An additional 28% said they pay between 20 and 40 points.

Seventy-six percent of employers offer at least one defined benefit plan, with 70% of those offering a traditional pension plan. Virtually one in four plan sponsors is planning to freeze their DB plan within the next 12 months; almost as many say they will reduce plan benefits and another 14% plan to terminate their DB plan altogether.

Investment Monitoring

Diversified’s survey found an increasing level of investment due diligence among plan sponsors, with more than one-third of companies relying on a dedicated investment review committee to select and monitor investment options. More than half of these committees meet quarterly and 28% said they meet even more often, according to the press release. At least one in three employers offer exchange-traded, emerging market and target date funds among their fund options.

Investment flexibility is important within corporate retirement plans. More than half of corporate plan sponsors look to investment managers other than their recordkeeper for the majority of their plan assets, while 14% only offer investments from their recordkeeper’s fund family.

Additionally, two in three employers have established a formal investment policy statement to help monitor the performance, risk, and style consistency of funds they offer.

Recordkeeper Selection

Consolidation among plan providers is decreasing with 16% planning to consolidate their recordkeeping for multiple plan types with one provider (an 8% decrease from last year) and 15% are planning to consolidate investments for multiple plan types with one provider (also an 8% decrease from one year ago).

Further, interest in total retirement outsourcing continues to grow, with 29% considering it (a 9% increase from 2006).

Diversified Investment Advisors’ Report on Retirement Plans – 2007 survey was conducted by Diversified Investment Advisors, Inc. and administered by LIMRA International and FGI Research, Inc. among U.S. companies with at least 1,000 employees. The survey featured responses from 200 individuals responsible for the administration of retirement benefits in their companies. Report on Retirement Plans – 2007 contains data based on the 2006 plan year and focuses specifically on the defined benefit and defined contribution plans of U.S. companies.

For a copy of Report on Retirement Plans – 2007 send an e-mail with contact information to retirementsolutions@divinvest.com.

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