Participants Sticking With Managed Accounts

Financial Engines says that most plan participants who are automatically enrolled into the firm's managed account program stay with it.

In fact, according to a press release, an average of 60% stayed with the program. Financial Engines also notes that automatic enrollment into managed accounts also had an effect on the overall health of the employer retirement plan.

The portfolios of participants that were automatically invested into managed accounts had higher expected growth rates after Financial Engines made allocation changes to their portfolios, according to the firm. On average, these allocation changes were projected to increase the expected annual growth of participant portfolios by 91 basis points annually, net of fees.

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In an evaluation of plan sponsors that implemented automatic investing for nearly 80,000 existing plan participants, Financial Engines found that 40% decided to manage their 401(k) accounts themselves after a personalized 60-day communication campaign. Participants who chose to manage their 401(k) accounts on their own tended to have higher salaries, higher balances and higher savings rates.

Participants remaining in the managed account program have an average age of 43, a median salary of $40,780 and are contributing an average of 6% of pay, with an average 401(k) balance of $33,048 and a median balance of $12,931. Comparatively, those declining auto-investment in managed accounts are older (average age of 46) with a higher median salary of $56,971, and are contributing 9%, leading them to have an average and median 401(k) balance of $76,804 and $36,150, respectively.

Of the 225,000 participants enrolled in the Financial Engines managed accounts program as of December 31, 2007, more than 20% were automatically invested.

As of March 31, 2008, the average annual account management fee that participants pay within these plans is 27 basis points – and, when combined with the underlying fund fees that these managed accounts members pay, the average total “all-in” fee is 63 basis points, according to Financial Engines.

Investors Capital Adds New Mutual Fund Program

Investors Capital Advisory Services (ICAS) added a new mutual-fund wrap program designed for advisers looking to provide clients with a low-cost/no-platform-fee alternative.

Through FundSelect, advisers can create a portfolio of FundVest mutual funds. FundVest-listed mutual funds allow advisers to buy, sell, or exchange over 2,500 load and no-load mutual funds managed by more than 160 fund companies without regular transaction fees. The funds offered through FundVest include: AIM, BlackRock, American Century, Columbia, and FranklinTempleton.


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According to the company, an adviser will determine the initial FundVest mutual fund selection and will provide continued management, rebalancing and reallocation of the underlying funds. Once the investment has been determined, the adviser may use, but is not limited to, the ICAS recommended FundVest-listed mutual funds.

FundSelect accounts greater than $250,000 do not incur platform fees or transactional ticket charges.

“This program allows our fee-based advisers to charge their clients less and utilize some great mutual funds to help them pursue their financial goals, said Kenneth Aulbach, investment strategist and SVP of Advisory Product Distribution for ICAS.

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