Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
February 22nd, 2018
Benefits & Administration
More Employees Enroll in HSAs for Long-Term Savings
ConnectYourCare’s 2018 report on consumer-driven health care account trends finds 44.9% of respondents chose to enroll in a health savings account (HSA) as a savings vehicle for future health care needs, over more immediate benefits like tax savings and lower premiums, up from 40.5% in its 2017 report. The majority of HSA account holders are spenders, both by their self-evaluation and backed up by spending and balance data. However, 44% of account holders saved at least half of their contributions in 2017, which may indicate a future shift in saver/spender trends. Read more >
Investing
LPL Financial Researchers Weigh In on Managing Interest Rate Risk
As 2017 ended, fixed income investors were searching for income, after several years of 10-year Treasuries yielding less than 2.5%, according to John Lynch, chief Investment strategist, LPL Financial, and Colin Allen, assistant vice president, LPL Financial. In an LPL research report, they note that when 2018 began, this changed quickly as tax reform and signs of inflationary pressures pushed market interest rates higher. The 10-year Treasury yield rose 0.87%, from a starting yield of 2.04% on September 7, 2017, to 2.91% on February 15, 2018. Investors have grown concerned that improving economic data and rising inflationary pressures may cause the Federal Reserve (Fed) to raise interest rates in 2018 at a more aggressive pace than originally anticipated. Given this backdrop, investors are naturally reassessing their interest rate risk. Read more >
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Products, Deals and People
FixedFee401k Promises DC Plan Market Disruption
The firm wants to completely change the basic pricing of 401(k) plans in the small- and mid-market by establishing fixed fees for advisory services and a flat fee per participant for recordkeeping services. Read more >
New Participant Portal at Bank of America Merrill Lynch
The revamped website will present employees with “a more simplified and interactive experience,” the firm says, while featuring data-driven recommendations. Read more >
Economic Events

Existing-home sales slumped for the second consecutive month in January and experienced their largest decline on an annual basis in over three years, according to the National Association of Realtors. All major regions saw monthly and annual sales declines last month. Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, sank 3.2% in January to a seasonally adjusted annual rate of 5.38 million from a downwardly revised 5.56 million in December 2017. After last month’s decline, sales are 4.8% below a year ago (largest annual decline since August 2014 at 5.5%) and at their slowest pace since last September (5.37 million).

Market Mirror

Wednesday, the Dow closed 166.97 points (0.67%) lower at 24,797.78, the NASDAQ was down 16.08 points (0.22%) at 7,218.23, and the S&P 500 decreased 14.93 points (0.55%) to 2,701.33. The Russell 2000 was up 1.84 points (0.12%) at 1,531.84, and the Wilshire 5000 lost 214.66 points (0.76%) to finish at 27,972.97.

 

The price of the 10-year Treasury note decreased 15/32, bringing its yield up to 2.944%. The price of the 30-year Treasury note fell 1 8/32, increasing its yield to 3.223%.

From the Magazine
Steady Growth
While many employees may be upset that they have no access to a defined benefit (DB) plan, there is reason to emphasize the value and dollar amount employers contribute to defined contribution (DC) plans. Read more >
How Advisers Make Plan Decisions
The responsibilities facing employers that sponsor qualified employee retirement plans, including 401(k)s, defined benefit (DB) plans, employee stock ownership plans (ESOPs) and 403(b) plans, are numerous and not to be taken lightly. For many plan sponsors, ensuring compliance with these responsibilities means hiring and leveraging outside expertise, such as working with an adviser or a consultant to get help navigating the industry. Read more >
Small Talk

ON THIS DATE: In 1630, Quadequine introduced popcorn to English colonists at their first Thanksgiving dinner. In 1819, Spain ceded Florida to the United States. In 1859, U.S. President James Buchanan approved the Act of February 22, 1859, which incorporated the Washington National Monument Society “for the purpose of completing the erection now in progress of a great National Monument to the memory of Washington at the seat of the Federal Government.” In 1860, organized baseball’s first game was played in San Francisco. In 1879, in Utica, New York, Frank W. Woolworth opened his first 5 and 10-cent store. In 1885, the Washington Monument was officially dedicated in Washington, D.C. It opened to the public in 1889. In 1924, U.S. President Calvin Coolidge delivered the first presidential radio broadcast from the White House. In 1973, the U.S. and Communist China agreed to establish liaison offices. In 1984, U.S. Census Bureau statistics showed that the state of Alaska was the fastest growing state of the decade with an increase in population of 19.2%. In 1997, Scottish scientist Ian Wilmut and colleagues announced that an adult sheep had been successfully cloned. Dolly was actually born on July 5, 1996. Dolly was the first mammal to have been successfully cloned from an adult cell.

SURVEY SAYS: We recently covered a survey in which Americans reported an average bump in take home pay of $130.76 as a result of tax reform. Nearly 13% indicated they are going to use that money to save more for retirement. This week, I’d like to know, did your take-home pay increase as a result of tax reform, and if so, how do you plan to use it? You may respond to this week’s survey by 6 p.m. Pacific time today. Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

Advertising: Paul Zampitella paul.zampitella@strategic-i.com

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