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Online Advisers Look Far Beyond Mutual Funds

Advisers are routinely using non-industry websites, particularly YouTube, and bank online in larger numbers than expected, says a new study tracking e-business habits. The findings have implications for asset managers across the industry.

"We think asset managers should incorporate a lot more multimedia into their websites. Even older advisers, in their sixties and seventies, are going to YouTube," said Lindsay Geimer, a consultant with kasina and co-author of a recent study, "What Advisers Do Online."

YouTube scored highest among advisers aged 20-40, with 78% reporting they regularly access the site. However, another 61% of advisers aged 41-60 also reported regular visits to YouTube, and 34% of advisers aged 61-80 said they visited the site regularly.

Google or Yahoo!'s finance pages were the most popular sites among advisers aged 20-40, with close to 100% of this demographic reporting regular visits. Morningstar scored particularly well among all ages groups but was preferred primarily by advisers aged 20-40. Wikipedia and The Wall Street Journal also appeared on the radar of advisers across all age groups, although those sites were less popular with the 61-80 age crowd.

That said, 79% of all the advisers in the study reported they used online retail banking, indicating a willingness to conduct more transactional business online, something asset managers have underestimated. kasina points out asset managers' Web pages aren't keeping pace with business today.

Big Brown Owner Fined For Unauthorized Trades Still Raising $100 Million

Michael Iavarone may have rung the opening bell at the New York Stock Exchange last Wednesday and be poised, as owner of the magnificent Big Brown, to win the Triple Cown, but he can't win them all.

Securities regulators recently fined and censured Iavarone for unauthorized trades he made in 1999, during a seven-year run as a penny stock broker in which he worked at no less than four separate brokerage firms, The New York Post reports.

Nonetheless, Iavarone, co-CEO and president of International Equine Acquisitions Holdings, which owns Big Brown in a stable of about 80 racehorses, is forging ahead, raising an additional $100 million from investors for a hedge fund he is planning.

Future of 401(k) Market Lies with Collective Trusts

Industry leader SEI recently concluded in a white paper that collective investment trusts (CITs) are becoming more popular in the defined contribution retirement market. In the first quarter of 2008 alone, 63 new collective trusts were launched, and from 2004 to 2007, CIT assets actually tripled.

While CITs share similar characteristics of mutual funds, they are an institutional-only product that combines assets from multiple retirement plans into a single portfolio. Best known for their cost effectiveness and lower fees-which can most likely be attributed to their simple structure and regulatory status-CITs are exempt from SEC registration as well as from the Investment Company Act of 1940.

The report indicated that CITs may be an underestimated investment opportunity, and in the wake of the Pension Protection Act of 2006, many suspect they are in line for even more growth. This is because of an expected increase in retirement plan participation as well as a portion of the Act that requires sponsors to provide lower-cost options.

CITs were found in 41% of defined contribution plans in 2006, versus 32% of plans in 2003. Retail mutual funds dropped during the same period from 65% to 54%.

"CITs are gaining momentum because they fit two of the major trends affecting plan sponsors," said Phil Masterson, managing director, solutions, for SEI's investment manager services division.

"With investors becoming more outcome-oriented, plan sponsors want to be able to offer defined contribution solutions as robust as those on the defined benefit side. At the same time, public policy and litigation are increasing the scrutiny of plan costs and fees, pushing plan sponsors toward lower-cost solutions," Masterson added.

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