Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
July 22nd, 2014
Benefits Briefs
Millennials Risk Losing Market Gains
Approximately 39% of young adults working in the U.S. believe cash investments are the best place to grow money they will not need for at least 10 years—three times the number in that age group who picked the stock market, according to an analysis of’s Financial Security Index. About one in four Americans overall prefers cash investments for money that can be left untouched for a decade or more, with the strategy beating out real estate (23%) for the top spot. Most cash investment yields remain below 1%, the report shows, implying Millennials who rely on cash investments could fall short on retirement income down the line.
Natixis Working With MIT for Behavior Research
Natixis Global Asset Management is funding a research project focused on investor behavior and personal financial benchmarking, based at Massachusetts Institute of Technology (MIT) and led by Andrew W. Lo from the MIT Sloan School of Management. This research program will initially study the industry practice of using an index as a benchmark and developing a more modern approach to benchmarking, according to a variety of factors, most notably an individual’s unique circumstances. The project will offer Lo and the school’s Laboratory for Financial Engineering (LFE) researchers data access from its global Investor Insights surveys of individuals, financial advisers and institutions, Natixis says.
Buyer’s Market
MassMutual Retirement Services has appointed eight new relationship managers, who will be responsible for parts of New York, New Jersey, New England, California, Arizona, Nevada, Oregon, Washington and Alaska. MassMutual said the new appointments are part of a plan to increase the number of relationship managers from the current staff of 98 to a total of 110 to help keep pace with sales efforts. The relationship managers work with employers’ on-staff decisionmakers, investment advisers, attorneys and accountants to help manage plans as effectively as possible.
Nationwide Offers Access to Woman- and Minority-Owned Firms
Nationwide Retirement Solutions has released the Nationwide Diverse Managers Fund. The fund is designed to give participants of defined contribution (DC) retirement plans, in both the public and private sectors, access to investments managed by minority- and woman-owned firms. The fund is a balanced portfolio that invests in U.S. and international stocks, small-cap stocks and fixed-income securities. It is managed by four separate minority- and woman-owned investment firms, including Ariel Investments, Herndon Capital, Garcia Hamilton & Associates and Strategic Global Advisors.
Market Mirror
Major U.S. stock indices had a rough start to the week yesterday, with the Dow down 48.45 points (0.28%) at 17,051.73, the Nasdaq 7.44 points (0.517%) lower at 4,424.70, and the S&P 500 closing at 1,973.63—a decrease of 4.59 points (0.23%). The Russell 2000 decreased 4.95 points (0.43%) to 1,146.66, and the Wilshire 5000 lost 50.99 points (0.24%) to finish at 20,861.57.

On the New York Stock Exchange (NYSE), 3.22 billion shares changed hands, with 1.7 declining issues for every advancing issue. On the Nasdaq, 2.77 billion shares traded, with a 1.64 to one ratio of decliners to advancers.

The price of the 10-year Treasury note was down 1/32, bringing its yield to 2.474%. The price of the 30-year Treasury bond decreased 4/32, increasing its yield to 3.266%.
Financial Sense
Average 43-Year-Old Has $91k in DC Savings
The average participant in the U.S. defined contribution (DC) retirement system is 43 years old and has saved $91,000, according to Aon Hewitt’s “2014 Universe Benchmarks” report. More than three-quarters of employers in the U.S. rely on DC retirement plans as the primary retirement income vehicle for their employees, the report shows, putting an increasing amount of pressure on individual workers when it comes to planning for retirement. Expressed as a multiple of total participant pay, the average plan balance is 1.2 times pay, up from 0.9 times that in 2012.
Members of the California Public Employees’ Retirement System (CalPERS) Board of Administration are required to receive investment-related training, under a new state law. Assembly Bill No. 1163, or AB 1163, was signed into law late last week by California Governor Jerry Brown. The language of the new law says the board is required to adopt an education policy for its members and further requires that “all board members receive a minimum of 24 hours of board member education within the first two years of assuming office and for every subsequent two-year period in which the person serves on the board.”
Small Talk
ON THIS DATE: In 1376, the legend of the Pied Piper of Hamelin leading rats out of town is said to have occurred. In 1587, a second English colony was established on Roanoke Island off North Carolina, later to vanish under mysterious circumstances. In 1796, Cleveland was founded by General Moses Cleaveland. The USS Constitution was underway and out to sea for the first time in 1798 since being launched on October 21, 1797. In 1812, English troops under the Duke of Wellington defeated the French at the Battle of Salamanca in Spain. In 1933, Wiley Post ended his around-the-world flight; he had traveled 15,596 miles in seven days, 18 hours and 45 minutes. In northern Iraq in 2003, Saddam Hussein’s sons Odai and Qusai died after a gunfight with U.S. forces. The 9/11 Commission’s final report was released in 2004; the 575-page document concluded that the hijackers had exploited “deep institutional failings within our government.” In 2011, the space shuttle Atlantis landed successfully at Kennedy Space Center after completing STS-135. It was the final flight of NASA’s space shuttle program.
TUESDAY TRIVIA: Bananas grow on a tropical plant that is not a tree—it has no trunk. Bananas are gigantic herbs that spring from underground stems. What appears to be the trunk is a false stem formed by tightly wrapped leaf sheaths. With stalks 25 feet high, they are the largest plant on earth without a woody stem.
Data and Research
Early Withdrawals Found to Exacerbate 401(k) Account Disparities Across Race, Gender
Final Fiduciary Rule Expected Soon
Ask the Experts
Are Roth Excess Deferrals Taxed Twice?

Editorial: Alison Cooke Mintzer


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