Products May 7, 2015

Transamerica Adopts PFaroe Risk Analytics

Transamerica Retirement Solutions has adopted RiskFirst’s real-time analytics and reporting platform, PFaroe, for use in coordination with plan sponsor clients and its advisory partners.
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RiskFirst’s PFaroe solution allows Transamerica clients to monitor and review defined benefit (DB) plan funding positions on a daily basis. It also allows advisers and sponsors to work together to do deep dives into DB plan risk—including value-at-risk (VaR) interrogation, what-if analysis, and stress-testing against historic market events.

Transamerica hopes the partnership will bring clients a better understanding of risk exposure and more effective implementation of investment strategies. The ability to monitor and react quickly to changes in DB plans’ funded statuses is especially pertinent for Transamerica, the firm says, given the large number of sponsor clients seeking to reduce risk their programs through dynamic asset allocation or glide-path strategies.

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PFaroe also allows Transamerica to offer accurate, daily valuations at a much more affordable price than previously possible, which the company believes will provide “a number of new business opportunities.”

Matthew Seymour, managing director at RiskFirst, adds that in the past, these services would only have been available from the highest-end investment advisory firms and at a significant cost. Using PFaroe, advisers and their sponsor clients get a more affordable but equally powerful approach, RiskFirst says.

The firm has created similar arrangements with retirement and investment services providers, including Nuveen Asset Management, Northern Trust and Callan Associates, among others, since evolving from PensionFirst to RiskFirst last year.   

For more information please go to www.riskfirst.com.

Diversions May 7, 2015

Big Inheritance Might Hurt More Than Help

Wealthy families fear big windfalls might do more harm than good for the next generation, according to a survey of high-net-worth parents.
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“How Much Should I Give to My Family? On The Risks and Rewards of Giving,” from Merrill Lynch’s Private Banking and Investment Group, takes a look at the great transfer of intergenerational wealth now under way.

Most high-net-worth parents (91%) plan to leave the lion’s share of their wealth to family members, motivated by a desire to positively influence the lives of loved ones. Yet the survey results indicate that many see significant risk in passing on wealth without context, conversation, guidance or accountability. Parent respondents note that fear of disrupting family harmony and a lack of clarity rank high on the list of reasons not to discuss giving.

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Nearly half (46%) of respondents are concerned about giving too much money; only about half are confident that the distribution of their assets will have the intended impact. The greater their assets, the greater the level of concern.

When is an inheritance or gift too large? Nearly half (46%) say “when the money creates a disincentive to achieve one’s full potential.” The tipping point, according to 28%, is when the recipient can indulge in a perpetual life of leisure.

Among the findings:

  • 63% say they have documented or defined plans to pass financial assets to others, but only 29% have had a conversation with the recipients;
  • More than half (52%) of all respondents and 42% of those with more than $10 million in assets intend to distribute virtually all of their remaining assets after they die, with their wishes outlined in a will or trust and estate plan;
  • 16% have articulated their intended purpose via letter;
  • 3% used a values statement to convey their wishes; and
  • 2% turned to video to outline their wishes.

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