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401(k)s

Fidelity Sees 401(k) Surge Due to Auto Enrollment

March 1, 2010 - Fidelity Investments expects its retirement assets to continue to increase this year as both employers and employees become more engaged with 401(k) plans.

Extreme Makeover: 401(k) Edition

February 8, 2010 - Investors are about to test drive 401(k) plans with a 21st Century whole new look and feel.The Department of Labor is promising streamlined rules for 401(k) advice that plan sponsors may actually use (see "Week in Review," page 4). The government is looking into the possibility of offering annuities or other lifetime income options in defined contribution plans.

403(b) Group Seeks Common Language

February 8, 2010 - An industry group developing best practices for 403(b) retirement plans is coming closer to streamlining these plans to make them even more similar to 401(k) plans, but first they will have to get everyone to agree to speak the same language.Leaders say the SPARK Institute's work on 403(b) best practices is coming along smoothly, thanks to the cooperative efforts of approximately 50 participating institutions. The latest update, version 1.04, fixes many of these communication issues by requiring a standardized reporting format, which it hopes most institutions will adopt by this July.

Putnam Calculator Directs 401(k) Investors to Retirement Income

February 1, 2010 - NEW YORK -- Online retirement calculators are usually so confusing or overwhelming that the average plan participant logs in, checks their account balance and then logs off without making any changes. Putnam Investments has developed a new retirement income twist it hopes will resonate with investors, plan sponsors and financial advisers. "Complexity leads to inactivity," said Edmund Murphy, managing director and head of defined contribution at Putnam, at a presentation at the Four Seasons Hotel last week. "Participants find it hard to see how their balance turns into retirement income. They are told they need to save millions, and they just give up and turn off instead."

Merrill Runs $20 Million 'help2retire___' Campaign

February 1, 2010 - Bank of America's Merrill Lynch Wealth Management has launched a new U.S. marketing campaign, "help2retire___," to illustrate individuals' evolving retirement priorities and personal aspirations. Budgeted at $20 million, it launched last Monday and is scheduled to run through the end of April on broadcast network and national cable TV, as well as print and online consumer and trade magazines, including sister publication Financial Planning.

Obama Proposals Could Boost Annuity Sales

February 1, 2010 - To help the middle-class save for retirement, President Obama may have also given a boost to the annuities sector.Last Monday, Obama proposed a series of measures, including expanding existing tax credits for child care and retirement savings, and providing financial relief for families caring for children and the elderly.The White House also plans to promote "the availability of annuities and other forms of guaranteed lifetime income, which transform savings into guaranteed future income, reducing the risks that retirees will outlive their savings or that their retirees' living standards will be eroded by investment losses or inflation."

New Financial Regulations to Create Unprecedented 'Sea Change' at SEC

January 25, 2010 - BOSTON -- Mutual fund companies must stay on top of their compliance programs, particularly because Congress is likely to pass new financial regulations, executives warn. "Regulation writing is about resolving tensions and balancing purposes,' said Michael Novey, associate tax legislative counsel at the Office of Tax Policy at the Department of Treasury. "Our task is to implement legislative purpose, recognizing that Congress' acts ought to be workable. There is a tremendous amount of misunderstanding about many of the proposed regulations."

C- Grade is Nothing To Crow About for 401(k)s

January 18, 2010 - The mutual fund industry should proudly celebrate Americans' 73% approval rating for 401(k)s, according to an Investment Company Institute report, "Enduring Confidence in the 401(k) System." In our book, a 73% rating equals a C- grade that, in fact, should be a wake-up call for the industry to do a far better job of equipping Americans to adequately prepare for a decent and healthy life in their old age.

ICI Study Finds 401(k) Confidence, Apathy

January 18, 2010 - A new survey by the Investment Company Institute finds that most Americans are still confident that their 401(k) plans can help them reach their retirement goals, but last year's 31% average drop in account balances has also highlighted the need for improvements to this popular, critical retirement vehicle. Improving education and financial literacy among investors, as well as boosting participation among African American and Hispanic minorities, should be a top priority of the nearly $12 trillion mutual fund industry, said Mellody Hobson, president of Ariel Investments.

2010 Will Be The Year Fund Investors Get Real

January 4, 2010 - Since the recession hit two years ago, 80% of mutual fund firms have laid off tens of thousands of people, as total assets under management dropped from $11.999 trillion at the end of 2007 to $10.688 trillion as of October. In line with this 11% decline in assets, fees have undoubtedly plummeted by at least $1 billion a year. While the S&P 500 delivered a remarkable 24.9% return last year, the fact of the matter remains, the stock market is still down 30% from its peak in October 2007. This is why investors in 2009 remained stock-spooked, yanking $36 billion from U.S. equity funds and socking $357 billion into bond funds.

Downturn's Upside: Being Shocked Into Saving

January 4, 2010 - As investors begin to regain their confidence in the market, financial advisers and mutual fund executives are beginning to map out changes in investor behavior and give the old rules some new twists. The scorched-earth mentality that permeated the investing world last year has all but disappeared, and the market rally has given investors much of their confidence back. But, as many predicted, investors of all ages have been unalterably changed. They have gained renewed respect for diversification, are grateful for even single-digit returns, and are only slowly moving back into stocks.

SEC to Revisit 12b-1 Fees­­, Again

December 14, 2009 - Thirty years after the Securities and Exchange Commission allowed an exemption to help mutual funds pay for promotional sales and marketing expenses, the agency is once again considering revising or renaming these controversial charges, known as 12b-1 fees. But judging from the SEC's history of inaction on this divisive issue, not to mention the mutual fund industry's staunch defense of the use of these fees to support investors and sales intermediaries, many industry executives don't expect a major change to actually see the light.

New York Life Builds Sales Force to Target DC Investment-Only

November 16, 2009 - Despite the financial services industry's downsizing, New York Life Investments is building up a sales force to target the defined contribution market. The unit of New York Life Insurance Co. says it plans to hire a regional sales staff-three regional vice presidents and an internal sales representative -in the next few weeks for its defined contribution investment-only business.

Auto-Enrollment Costs Challenge Advisors

November 16, 2009 - PALM BEACH, Fla. - Most 401(k) and other defined contribution plan administrators and sponsors like the automatic enrollment feature in the retirement savings plans they manage because it gets more people saving earlier, but the involuntary nature of these plans does not diminish the burdens they place on administrators to run them. While many of these reluctant participants may not be of the saving and investing mindset when they join the plan, the hope is that auto enrollment can help steer them on the right path at an early age. Participants' interest in retirement generally increases the closer they get to their retirement date, and auto enrollment can give investors a critical head start.

403(b) Providers Struggle to Adopt Changes

November 16, 2009 - PALM BEACH, Fla. - Almost a year after new rules governing 403(b) retirement plans for educational and non-profit workers were supposed to take effect, plan sponsors, vendors and third-party administrators are still struggling to comprehend the myriad of changes. In lieu of the promised guidance from the Department of Labor and the Internal Revenue Service, industry leaders are trying to develop best practices to fill in the regulatory gaps and standardize competing formats, as well as interpret the confusing wording of Form 5500 Schedule C, which governs eligibility, compensation and fiduciary rules.