Products February 10, 2015

Voya, Alliance Bernstein Create Income Product

A new retirement income investment option from Voya Financial and AllianceBernstein seeks to deliver a sustainable lifetime income strategy for participants in large 401(k) plans.
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Voya Financial announced that its retirement solutions business has added a new retirement income investment option to its recordkeeping platform.  

Designed and supported by AllianceBernstein (AB), the Lifetime Income Strategy solution is now available for 401(k) plan participants of large employers with more than $200 million in plan assets. The age-based, asset-allocation program is designed to help participants convert their savings over time into a stream of guaranteed income that lasts throughout retirement, the firms explain.

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“We know Americans are shouldering more responsibility for generating their own income once they leave the workforce, and many are uncertain about how to address this very important aspect of retirement planning,” notes Rich Linton, president of large corporate and individual markets for retirement solutions at Voya Financial. 

As explained by Voya, the Lifetime Income Strategy provides participants with a personalized asset-allocation strategy that helps build up retirement savings, followed by an income benefit for life that is guaranteed by multiple insurers. The program leverages the expertise of AB’s multi-insurer platform, while incorporating both guaranteed and non-guaranteed components into one consolidated program. 

Voya says investors will benefit by having a single, integrated solution with several different insurance companies splitting the responsibility under the various income guarantee contracts.  This diversifies risk and helps participants receive competitive payouts, Voya suggests.

Other important benefits and features of the Lifetime Income Strategy include the following:

  • Fiduciary Protection:  AB assumes the role of fiduciary, including taking on full responsibility for the selection of the multiple insurers who provide the guaranteed income component. 
  • Investment Flexibility:  Investments for the non-guaranteed component are customizable.  Plan sponsors can choose to utilize their current investment option lineup should they desire, and the program is designed for use as a qualified default investment alternative (QDIA).
  • Downside Protection:  The program allows for income growth potential from market gains as well as income protection against market losses through a guaranteed lifetime withdrawal benefit (GLWB).  This feature provides participants with a stream of guaranteed retirement income for life, Voya says.
  • Advanced Glide Path:  Investors can select the age they plan to retire and adjust over time their desired level of income protection, if necessary, based on their unique retirement outlook.
  • Individual Control:  Participants have the ability to withdraw their assets or transfer to other investment options at their convenience — giving them full control while in the program, including in retirement.

Richard Davies, head of AB defined contribution, predicts the new solution will help employees better navigate the increasing complexity of ensuring they have enough money to live comfortably in retirement. He notes that, as a retirement plan client of Voya, the AB 401(k) plan has recently adopted the Lifetime Income Strategy as its QDIA.

More information is at www.voya.com. 

Data & Research February 10, 2015

Rollover Market Could See $382B This Year

About half of affluent investors with former workplace retirement plan assets could move that money into an individual retirement account (IRA) in 2015, says Cogent Reports.
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According to the 2014 annual Investor Rollover Assets in Motion study, a potential $382 billion could transfer into IRAs this year. Providers hoping to get a piece of the action should set their sights on Generation X and Generation Y investors, who are the likeliest to take action. The reason for the increased amount of money in motion is a rise in the number of households with at least $100,000 in investable assets, Cogent Reports finds.

Gen X and Gen Y investors with at least $100,000 in investable assets hold the largest proportion of their assets in former workplace-based retirement plans, and say the likeliest action they’ll take in the near future is to roll those assets over into an IRA.

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A combination of job jumping and experimenting with different careers has helped these younger investors accrue sizeable balances in these former employer-sponsored plans, according to Sonia Sharigian, senior product manager at Market Strategies International and author of the report. “The younger the investor, the more receptive and ready they are in terms of taking action,” Sharigian says.

Almost two-thirds of Gen X investors (61%) and 74% of Gen Y investors with former workplace retirement plans intend to roll funds into a rollover IRA within the next year, according to Cogent’s findings.  

According to the report, the distributor firms best positioned to capture rollover assets from investors with a former retirement plan are: Vanguard, Charles Schwab and Fidelity Investments.

Low fees and strong brand reputations are key factors that Gen X and Gen Y investors cite when choosing a rollover IRA provider for former plan assets, Sharigan says. “Softer, more personal outreach is also influential among these younger investors, who also consider providers they have established relations with—especially firms that make them feel like a valued customer,” she notes.

The top 10 preferred rollover IRA destinations are:

  1. Vanguard
  2. Charles Schwab
  3. Fidelity Investments
  4. Edward Jones
  5. Ameriprise
  6. E*TRADE
  7. USAA
  8. Merrill Lynch
  9. Wells Fargo Advisors
  10. T. Rowe Price

 

Cogent Reports is a division of Market Strategies International.

The Investor Rollover Assets in Motion report drills down into the assets investors hold in current and former employer-sponsored retirement plans to help firms maximize their opportunity to gain IRA rollover assets. The report provides sizing for the rollover IRA market, profiles investors likeliest to roll over plan assets, identifies the financial services firms best positioned to capture assets and analyzes the specific steps investors have taken to prepare for retirement.

 

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