In Practice December 28, 2018

Looking Back at the Value of Financial Wellness in 2018

From targeted education to utilizing investments, 2018 highlighted different areas of financial wellness. 

Reported by

As 2018 draws to a close, we take a look at how financial wellness has grown in the past 12 months. What features were among the most popular with participant employees? How has targeted education fared with both workers and employers? And what can plan sponsors expect in the upcoming year? Here, we highlight some of our most popular stories of 2018.

Most 403(b) Plan Sponsors Feel Responsible for Employees’ Financial Wellness
The 2018 PLANSPONSOR Defined Contribution Survey finds that 403(b) plan sponsors offer more formal financial education/guidance on a variety of topics than the overall 4,000 defined contribution (DC) plan sponsors surveyed. Read more.

Financial Stress Adds Significantly to Labor Costs
John Hancock researchers sought to quantify the cost of workers’ financial stress for employers, finding the average annual excess expense per employee is a lot more significant than may be assumed. Read more.

Who Is Responsible for Retirement Security?
National Retirement Security Week, from October 21 through 27, highlights the complementary roles of governments, employers and individuals in creating better retirement security for everyone in the U.S. Read more. 

Retirement Readiness Is Possible for Caregivers, But It’s Tough
It’s not hard to imagine why caregivers deprioritize their retirement savings; harder to figure out is how to support caregivers as they work to build their own financial wellness and retirement wealth. Read more. 

Employers Turn to Providers for Financial Wellness Program Offerings
When assessing a program, they first look at cost, and then ease of implementation and expertise, Prudential found. Read more.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

PANC 2018: Financial Wellness
The importance of measuring return on investment and addressing participants’ short-term needs. Read more.

Retirement Planning for Women Should Consider Differences From Men
Women may face lower pay, more work disruptions, higher longevity and higher retirement health care costs than men, a study points out. Read more.

Giving Them a Break
Student loan debt relief programs may grow in prominence. Read more.

Employees Endorse Investments in Financial Wellness
The importance of workplace financial wellbeing programs jumped five points in the 2018 Consumer Health Mindset Study from Alight Solutions. Read more.

Plan Sponsors Missing Opportunities to Improve Employee Retirement Outcomes
While employers cited rising health care costs followed by outliving retirement savings as their biggest concerns for employees’ retirement readiness, TIAA says surprisingly few have built retirement plan offerings that solve for these challenges. Read more. 

Speaking Their Language
How to tailor the message for different demographics. Read more. 

Compliance December 28, 2018

Share Class Disclosure Failures Lead to SEC Settlements

According to the SEC, two firms will collectively pay more than $1.8 million for violations related to share class disclosure failures.

Reported by

The Securities and Exchange Commission (SEC) has announced the settlement of various charges filed against two New York-based investment advisory shops and the CEO of one of the firms.

According to SEC enforcement staff, advisers with the firms selected mutual fund share classes inconsistent with their disclosures to clients. The firms and the CEO will collectively pay more than $1.8 million, which will be returned to harmed investors.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

According to the SEC’s orders, the parties entering the settlements are American Portfolios Advisers Inc., PPS Advisors Inc., and PPS’s Chief Executive Officer and Chief Investment Officer Lawrence Nicholas Passaretti.

SEC says these entities invested advisory clients in mutual fund share classes that paid 12b-1 fees to the firms’ investment adviser representatives (IARs), even though less expensive share classes of the same funds were available. The orders find that American Portfolios and PPS “failed to disclose conflicts of interest, violated their duty to seek best execution, and failed to implement policies and procedures designed to prevent violations of federal securities laws in connection with their mutual fund share class selection practices.” 

In particular, in disclosures to clients, American Portfolios incorrectly stated that its IARs either did not receive 12b-1 fees or only selected the more expensive share classes when less expensive share classes of the same fund were unavailable, while PPS incorrectly stated that it selected higher-cost share classes for the “long-term benefit” of clients and only where less expensive share classes of the same fund were unavailable.

Without admitting or denying the findings, American Portfolios, PPS and Passaretti consented to cease-and-desist orders, and American Portfolios and PPS consented to censures. American Portfolios agreed to pay $895,353 in disgorgement and prejudgment interest and a civil penalty of $250,000. PPS and Passaretti agreed to pay $631,746 in disgorgement and prejudgment interest and a civil penalty of $75,000. Collectively, the firms and Passaretti will pay more than $1.8 million, which will be distributed to harmed clients through Fair Funds.

According to SEC staff, American Portfolios and PPS were not eligible to self-report pursuant to the Division of Enforcement’s Share Class Selection Disclosure Initiative announced in February because the Division contacted them about the disclosure violations before the initiative was announced.

«