| | Benefit Briefs | | Retirement Plan Size, Equity Holdings Drive Fees | | Plan size, average participant account balance,
and percentage of plan assets invested in diversified equity holdings are
drivers of defined contribution (DC) plan fees, a study finds. “Consistent with
prior years, this study helps to differentiate the factors that drive fees from
a number of other plan features that do not appear to have a significant impact
on fees for the companies studied,” explains Scott Parker, a principal with
Deloitte Consulting LLP, who led the research effort. “It’s notable that the
primary drivers of fees continue to be the size of the plan as measured by
number of participants and average account balance, as opposed to other
features that might be associated with complexity in servicing plans, which did
not appear to have a significant effect on fees.” | | | Buyer's Market | | Jean-Dominique Butikofer joined the fixed-income
team as head of emerging markets at Voya Investment Management, the asset
management business of Voya Financial Inc. Butikofer brings 18 years of
experience in emerging markets to this role, in which he will direct the
investment strategy for emerging markets, including sovereign and corporate
debt, macro analysis, country research, sovereign risk, currencies, local
rates, and asset allocation across sub asset classes. | | Lincoln Enhances Investment Choice for Small Plans | | Lincoln Financial Group’s Retirement Plan
Services business enhanced its Ibbotson Insight Series investment lineup
available in the Lincoln Director employer-sponsored retirement plan program. The
new lineups are designed to provide small market plan sponsors and their advisers
with more flexibility in both fund and lineup selection. The investment lineups
address the individual investment preferences of participants based on an
employer’s workforce demographics, and can also include target-date and
qualified deferred investment alternative (QDIA) investment options. | | Pete Schroedle has joined OneAmerica in a new
executive sales position, in which he will target new and existing clients in
the firm’s recently created central region. Schroedle has been named regional
vice president of retirement sales for the central region of the companies of
OneAmerica. In this newly created role, he will oversee the firm’s Chicago,
Cleveland, Detroit, Indianapolis, Kansas City, Minnesota, San Antonio and St.
Louis offices. | | | Economic Events | | Total
existing-home sales, which are completed transactions that include
single-family homes, townhomes, condominiums and co-ops, rose 2.4% to a
seasonally adjusted annual rate of 5.15 million in July from a slight
downwardly revised 5.03 million in June, according to the National Association
of Realtors. Sales are at the highest pace of 2014 and have risen four consecutive
months, but remain 4.3% below the 5.38 million-unit level from last July, which
was the peak of 2013.
In the week
ending August 16, the advance figure for seasonally adjusted initial claims for
unemployment insurance was 298,000, a decrease of 14,000 from the previous
week’s revised level, the Labor Department reported. The previous week’s level
was revised up by 1,000 from 311,000 to 312,000. The four-week moving average
was 300,750, an increase of 4,750 from the previous week’s revised average. The
previous week’s average was revised up by 250 from 295,750 to 296,000.
The average interest rate for a 30-year fixed-rate
mortgage is 4.10%, down from 4.12% one week ago, according to Freddie Mac. The
average interest rate for a 15-year fixed-rate mortgage is 3.23%, down from
3.24%.
| | | Market Mirror | | Thursday, the Dow closed 60.36 points
(0.36%) higher at 17,039.49, the NASDAQ increased 5.62 points (0.12%) to 4,532.10,
and the S&P 500 was up 5.86 points (0.30%) at 1,992.37. The Russell 2000
ticked up 2.52 points (0.22%) to 1,160.03, and the Wilshire 5000 gained 52.96
points (0.25%) to finish at 21,084.51.
On the NYSE, 3.2 billion shares changed
hands, with 1.5 advancing issues for every declining issue. On the NASDAQ, 2.8
billion shares traded, with a 1.2 to 1 ratio of advancers to decliners.
The price of the 10-year Treasury note was up 6/32,
bringing its yield down to 2.410%. The price of the 30-year Treasury bond
increased 21/32, decreasing its yield to 3.190%.
| | | Rules & Regulators | | The Department of Treasury and Internal Revenue
Service (IRS) have established a new user fee form for employee plan opinion or
advisory letter requests. The updated form must be used for all applications
postmarked on or after August 1, 2014. | | IRS to Host Corrections Programs Webinar | | The Internal Revenue Service (IRS) is hosting a
free webinar, “Correcting Retirement Plan Mistakes Using IRS Correction
Programs.” The event, to be held September 4 at 2:00 p.m. Eastern time, will
cover how the Employee Plans Compliance Resolution System (EPCRS) corrections
programs work, how to address common plan failures, tips to expedite
submissions and how to resolve issues that cannot be addressed with EPCRS. | | | Financial Sense | | New Ways of Measuring Target-Date Funds | | “Everything should be made as simple as
possible, but not simpler,” Albert Einstein supposedly said in a 1933 lecture.
He may have been predicting the future of retirement investing and the
industry’s effort to crystallize the complex nature of target-date retirement
funds (TDFs) into two categories. One invests “to” retirement and sharply cuts
equity holdings when participants reach age 65, to avoid market risk; the other
invests “through” retirement and stays in equities for the long haul, to keep
earning high returns, volatility notwithstanding. The designation of “to”
versus “through” likely falls into Einstein’s “simpler” class: It offers only a
thumbnail sketch of a fund’s investment strategy and, as it considers only the
asset side of the equation, cannot address the full results. | | Bank of America has agreed to a settlement of
Securities and Exchange Commission (SEC) claims related to its sales of
mortgage-backed securities. Bank of America has agreed to settle the two SEC
cases by paying $245 million, but the bank will also pay $16.65 billion to
resolve various investigations involving violations of laws regulated by other
federal agencies. California Attorney General Kamala D. Harris announced
California will recover $300 million in damages, which will reimburse the
California Public Employees Retirement System (CalPERS) and the California
State Teachers Retirement System (CalSTRS) for losses on investments in
mortgage-backed securities of Bank of America and its affiliates. New York
Attorney General Eric T. Schneiderman announced $800 million will go to New
York State. | | Industries Have Differing Pension Investment Risk Tolerance | | Financial services, energy and consumer staples
have the best-funded defined benefit (DB) plans, according to an analysis by
the BNY Mellon Investment Strategy and Solutions Group (ISSG). The analysis of
the DB plans of 931 public companies revealed information technology (IT) and
health care companies tend to have the lowest-funded plans. Companies in
financial services also tended to have higher-than-average allocations to
equities, while well-funded plans in other business sectors had higher
allocations to fixed income and liability driven investing (LDI) strategies. “While
financial services companies may be in a better position than most sectors to
adopt a de-risking strategy, many have elected to be aggressively invested,”
says Andrew D. Wozniak, head of fiduciary solutions, ISSG. “They can do this as
they have the best ability to take on risk.” | | As of the second quarter of 2014, target-date
fund (TDF) assets grew to $677 billion, reflecting an asset change of 10.9%
year-to-date. This change is being driven by a continued new demand for the
funds. They have attracted $31.9 billion in year-to-date net inflows as well as
market appreciation—the average target-date fund grew 5.4% over the first six
months of this year. A generous market backdrop has allowed certain fund series
to demonstrate management value over recent quarters. | | | The World at Large | | The first risk-transfer transaction by a pension
in a pooled liability-driven investment (LDI) vehicle has been carried out by a
UK fund. | | | Small Talk | | ON
THIS DATE: In 1776,
General William Howe’s army arrived in Long Island hoping to capture New York
City and gain control of the Hudson River, a victory that would divide the
rebellious colonies in half. In 1846, the U.S. annexed New Mexico. In 1851, the schooner America outraced the
Aurora off the English coast to win a trophy that became known as the America’s
Cup. In 1864, the International Red
Cross was founded. In 1865, a patent
for liquid soap was issued to William Sheppard. In 1906, the Victor Talking Machine Company of Camden, New Jersey,
began to manufacture the Victrola. The hand-cranked unit, with horn cabinet,
sold for $200. In 1932, the BBC
(British Broadcasting Corporation) began its first TV broadcast in England. In 1950, officials of the United States
Lawn Tennis Association (USLTA) accepted Althea Gibson into their annual
championship at Forest Hills, New York, making her the first African-American
player to compete in a U.S. national tennis competition. In 1989, Nolan Ryan of the Texas Rangers
became the first pitcher in major league baseball history to register 5,000
career strikeouts. Ryan went on to rack up a total of 5,714 strikeouts, greater
than 1,500 more than his closest competition.
And now it’s time for FRIDAY FILES!
| | A couple tries entirely too long to fit a sofa
into a hatchback. Did they really think taking the cushions off (I fast
forwarded to 1:25) would help? | | In Albuquerque, New Mexico,
an 18-year-old showed up to a meeting with his probation officer driving an
electric shopping cart. When the probation officer asked him where he got it,
he admitted to taking it from a Walmart about five miles from the courthouse.
According to The Smoking Gun, the police contacted Walmart, which indicated it
wants to press charges.
In Manchester, New Hampshire,
police set up a “controlled delivery” of a package after the U.S. Postal
Service notified them it may contain drugs. After the man signed for the
package, detectives asked if they could open and search it. The man consented,
and police discovered the package contained 16 pounds of mari.juana. While
still at the man’s house, a FedEx truck showed up with another package for the
man. A police K-9 alerted the police there were drugs in that package as well.
Police found another 17 pounds of mari.juana inside.
| | This is an amazingly lucky landing for a
motorcyclist who hits a car. | | In Ocala, Florida, the city
council will reconsider a law banning saggy pants on city property, less than
one month after it was passed. Mayor Kent Guinn said he wants the ordinance,
which fines violators up to $500 and threatens jail time, repealed. He told the
local News 13 TV station he actually meant to veto it when it came across his
desk, but there were many papers and he mistakenly signed it into law.
In Ottowa, Canada, police
were called to a home for a report of vandals breaking in. The owner’s wife, a
house guest and the owner’s three young children were asleep inside when the
incident happened. According to CBC News, a police source said when officers
looked around the back door of the home, they found a letter purportedly left
by the vandals. It was set on a pile of items including kitchen knives, and
stated that items could have been stolen from the home, but weren’t, so the
family should lock its doors in the future.
| | Turtles can move fairly quickly when they want
something. | | In San Marcos, California,
the Cal State San Marcos campus was put on lockdown—with people asked to
shelter in place and traffic diverted from the campus, after a report of a man
carrying a g.un. Police searched the campus room by room and located the
suspect—who was carrying an umbrella. The campus was given the all clear.
In East
Hanover, New Jersey, Herman “Hy” Goldman celebrated his birthday Monday
with coworkers. He turned 101. According to the Associated Press, aside from a
brief absence to serve in the U.S. Army in World War II, Goldman has worked at
Capitol Lighting since 1941. The store says he was first hired to sell items
and stock and clean the displays. He now specializes in rebuilding items that
were damaged or unusable. Goldman also still drives himself to work.
Have a wonderful weekend,
everyone! | | Share the good news with a friend! Pass the Dash along – and tell your
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