DOL Proposes Target-Date Fund Disclosures
December 6, 2010
The U.S. Department of Labor's Employee Benefits Security Administration on Monday proposed disclosures on target-date funds offered in 401(k) plans.
Sponsors would have to disclose the fund's asset allocation; how that allocation changes over time, with a graphic illustration; the significance of the investment's target date; and a statement that the investment has the risk of losing money, even close to retirement.
"Based on our collaborative examination of this issue with the Securities and Exchange Commission, it is clear that all participants in participant-directed individual account plans can benefit from better information about how target-date investments are designed to meet their retirement savings needs," said Assistant Secretary of Labor for EBSA Phyllis C. Borzi.
DOL is accepting comments on this proposal through Jan. 14 via e-mail to e-ORI@dol.gov, attention TDF Amendments.
Tables Turn for Stock Funds in October
October saw inflows into equity funds for the first time since April, according to new data from the Investment Company Institute, increasing 3.7% from September to $5.3 trillion.
"This reflected a significant decrease in outflows for domestic equity funds compared to prior months-a change that might have been influenced by the relatively strong stock market-as well as an increase in the already significant flows into international equity funds," Sean Collins, ICI's senior economist, wrote in an analysis of the data. Collins, who was traveling at press time, was unable to comment in person.
Total mutual fund holdings, including equity, bond, hybrid and money market funds, were $11.5 trillion in October, up 2.1% from September. Taxable bond funds increased 1.8% to $2.2 trillion over the same period.
Pershing Issues Report on Retirement Market
Retirees will be rolling over $303 billion a year from their retirement savings accounts over the next few years, according to Pershing, and with this tremendous opportunity at hand, the company has issued a report for financial advisers called, "The Secret Knock: Unlocking the Retirement Opportunity."
The report is based on a survey of 2,086 consumers, 401 small business owners and 822 financial professionals and was developed in conjunction with strategic consulting and investment firm Mercatus. One of the keys, according to the report, is to become the primary retirement solutions provider. When doing so, share of wallet increases from 50% to 76%, according to the findings.
In addition, there are significant crossover opportunities when working with small business owners, who besides professional management are looking for help with their retirement planning.
Investors remain cautious of risk. Thus, advisers need to focus on managing risk and building downside protection into retirement plans. Financial professionals who provided downside scenarios to their clients experienced a 19% increase in net assets relative to their peers. MME
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