Deals & People April 1, 2009

Report: BofA Might Put Columbia on the Block

Five years after acquiring Columbia Management Group, Bank of America (BofA) might offload the business, according to the Wall Street Journal.
Reported by

The news report said the Charlotte, North Carolina-based BofA also wants to sell First Republic Bank, a private financial institution it inherited as part of BofA’s acquisition of Merrill Lynch & Co. last year (see “Merrill Lynch Stockholders Approve BoA Deal’).

As part of its 2004 acquisition of FleetBoston Financial Corp., BofA acquired Columbia, which had $386.4 billion in assets under management as of December 31, 2008. BofA could look to shed the investment management firm in an effort to get rid of non-core assets and better hold onto capital reserves

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The Journal said some BofA executives feel Columbia is redundant when compared with BlackRock Inc., a New York money manager that was partly owned by Merrill. BofA has no plans to sell its share of BlackRock, according to the newspaper.

Data & Research March 31, 2009

Long-Term Care Costs Put More Retirees at Risk

The latest update of the National Retirement Risk Index (NRRI) found that adding the impact of long-term care expenses means even more Americans will be at financial risk in their retirement.
Reported by

The index measures the number of people who may not be financially prepared for retirement. The Center for Retirement Research (CRR) at Boston College, which publishes the NRRI with Nationwide, said the addition of long-term care bumps the index from 61% a year ago to about 64%.

According to a news release, the NRRI baseline reading without the health-care impact was 44%, and the 61% figure includes only general health-care expenses.

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After adding the expected cost of long-term care insurance and out-of-pocket health care spending in retirement, the target replacement rate jumps to 98%, compared to the original NRRI replacement rate of 76% and the basic health NRRI replacement rate at 92%.

According to the CRR: “As with past NRRI analyses, these latest findings raise major concerns about the retirement security of Baby Boomers and succeeding generations.”

The CRR said long-term care plays a critical role in the retirement of many Americans so it needs to be considered in the overall retirement readiness calculations.

“Long-term care is an important expenditure risk for the elderly,” the CRR said. “People tend to lose some of their ability to function as they get older, and these losses can become severe late in life. To compensate, older people need assistance with basic activities of daily living (such as bathing, eating, dressing, and using the toilet) and with tasks necessary for independent living (such as shopping, cooking, and housework).”

The NRRI is updated twice annually. The latest report is available here.

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