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What Fund Execs Need to Know About New Investor Privacy Regs

September 15, 2008 - Identity theft, data loss and other privacy violations are among the leading threats faced by financial institutions. Depending on their nature, they can inflict reputational and brand damage, cause revenue losses and prompt civil liability suits by customers. What's more, regulators are taking an increasingly hard line in these matters. Two new regulatory measures to safeguard investor privacy have far-reaching implications for investment companies, and executives need to take steps to comply. The first measure, the 'Identity Theft Red Flags' rule, was issued by the Federal Trade Commission in November 2007. It has been discussed largely in terms of its impact on banks and credit and debit card issuers.

Cox: SEC to Propose New Disclosure Rules On Municipal Bonds

September 15, 2008 - The Securities and Exchange Commission plans to propose as early as the end of the month rules that would enhance municipal disclosure, SEC Chairman Christopher Cox said in an interview. The proposals will be aimed at implementing some of the municipal securities initiatives outlined in a 2007 white paper that can be accomplished without congressional authorization, Cox said. They would also come on top of rule changes the Commission proposed in July to establish a central disclosure repository called Electronic Municipal Market Access, or EMMA, that will be run by the Municipal Securities Rulemaking Board.

Tool Navigates Sea of Target-Date Funds

September 15, 2008 - Target-date funds, also known as lifecycle funds, are rapidly rising in 401(k) plans as the favorite qualified default investment alternative because they're much more appropriate than the traditional money market fund for hands-off investors. In theory, you simply pick the target date that's closest to when you expect to retire, and you're done. The fund rebalances your asset allocation over time, growing more conservative as you grow older. If only it were that simple.

Fund Companies Should Rethink Retirement

September 15, 2008 - Americans have changing needs for retirement products as they grow older, and mutual fund companies that recognize and respect the differences between the age groups can be much more effective. Charles Schwab recently surveyed thousands of adult Americans across four generations in order to gauge their different levels of perceptions and expectations about retirement. The groups were divided into the Silent Generation, ages 63 to 83; Baby Boomers, ages 44 to 62; Generation X, ages 32 to 43; and Generation Y, ages 21 to 31.

403(b) Overhaul First Since 1964

September 8, 2008 - AUSTIN, Texas - Making sure your company's 403(b) retirement plan is in compliance by Jan. 1, 2009 can be a daunting task, especially if you haven't gotten started yet. The new regulations by the Internal Revenue Service and Department of Labor loom as a ticking time bomb to some plan sponsors and vendors prone to procrastination, but IRS officials say the changes are meant to improve the plans, not frighten employers. 'We have no intention of going out and doing an extensive number of audits next January, nor do we have plans to increase the number of 403(b) audits we're doing now,' said an IRS official, who asked not to be identified, in an interview with MME.

Industry Braces for New 403(b) Regs

September 8, 2008 - AUSTIN, Texas - New 403(b) regulations are coming, whether or not plan sponsors and vendors are ready for the changes. 'This is different from anything we've ever done before,' said Tom Peller, vice president of compliance for Fidelity Investments, at the SPARK Institute's 403(b) Plans Issues and Answers Forum here last month at the Hyatt Regency hotel. 'In the past, when you had to do compliance, it was linear. You just checked things off one thing at a time. Almost all the changes in 403(b) regs are interconnected. Everything you change will impact something else. Your approach should be very different.'

With Good 401(k) Planning, Everybody Wins

August 18, 2008 - In addition to helping employees save for retirement, a solid 401(k) plan can help companies to attract, motivate and retain good workers, enhance a company's corporate reputation and contribute to the long-term financial success of the business, according to a new study by Charles Schwab. Among the findings, 95% of financial executives consider their company's matching contributions to be an important feature of the plan, but they still see room for improvement in making a better partnership with employees, according to the study, 'A Shared Benefit: Employer Views on the Value of 401(k) Plans.'

Companies Gear Up For XBRL Reporting

August 11, 2008 - The Securities and Exchange Commission could mandate the use of eXtensible Business Reporting Language (XBRL) in mutual fund risk return summaries by as early as the first quarter of next year, according to industry experts, putting many fund companies on the data-tagging fast track. XBRL US, the U.S. version of the international consortium, has joined forces with Andover, Mass.-based mutual fund data provider NewRiver to make sure public companies, mutual funds and credit rating agencies are ready in time.

Labor Department Proposes 401(k) Fee Disclosure

July 28, 2008 - The Department of Labor on Tuesday proposed requiring 401(k) plan fiduciaries to supply investors with standard account summaries that will clearly state fees, expenses and any administrative costs such as legal, accounting and recordkeeping charges-in actual dollars. Plans will also have to provide performance figures and comparable benchmark returns, information on investment options and how to obtain more detailed information, including education and/or advice. The Labor Department projects the disclosure will result in $6.1 billion in savings for investors between 2009 and 2018, a third of it due to lower fees due to increased transparency. That works out to a savings directly related to fees of $2.1 billion, or $225 million a year.

Retirement Assets Reach $17.6 Trillion, ICI Reports

July 28, 2008 - Despite difficult market conditions, Americans continued to save more for retirement last year, according to the Investment Company Institute.

401(k) Debit Cards: Dumb and Dangerous

July 28, 2008 - It's bad enough that 40% of workers in their 20s and 30s cash out their 401(k)s when they switch jobs, even though taxes and penalties decimate the balances to almost half, according to a CMI survey of 1,200 people in January commissioned by Fidelity. Worse, even, a small percentage of 401(k) participants take out loans or hardship withdrawals from their retirement savings, which average only $122,000 in the first place, with a national median balance of $66,000, data from the Investment Company Institute and the Employee Benefit Research Institute shows.

401(k) Plans Move to Collective Trusts

July 28, 2008 - BOSTON - Workers love pension plans, but providing 20 to 30 years of benefits to a huge retired workforce can cripple most companies' profits. As more firms drop their defined benefit pension plans in favor of defined contribution 401(k)s, institutions are looking for qualified default investment alternatives to mutual funds, such as collective investment trusts (CITs) and separately managed accounts (SMAs), to provide employees with pension-like features.

Fund Execs Defend 401(k) Fees

July 28, 2008 - BOSTON - Excessive fees in some 401(k) plans are hurting the reputation of all 401(k) plans and shaking investor confidence in what most financial experts agree is a great way for the majority of Americans to save for retirement. 'There is a notion in the press that 401(k) investors are being hosed. This is not the case,' said Michael Hadley, the Investment Company Institute's associate counsel for pension regulation, at the 'Defined Contribution Investment Only Forum,' held last Monday and Tuesday at the Harvard Club, and hosted by Financial Research Associates. '401(k) investors are getting an incredible deal.'

Equity Mutual Funds Slip 15 Basis Points in 2Q08

July 14, 2008 - Mutual fund investors held resilient in the second quarter of the year, 'shrugging off weakness in the labor and housing markets and even ignoring the rising cost of oil and gas,' announced Tom Roseen, senior research analyst for Lipper, during the firm's press conference last Tuesday on the quarter's results. 'We saw in the headlines that it was a very bad quarter, the worst quarter for the Dow since 1929, but I think you are going to see that that's not the case for mutual funds,' Roseen said. 'Certainly for a lot of the big, large-cap and value-oriented funds it was a real dour quarter and a horrible month in May, but if you take a grander look at things, the first two months of the quarter were really, really good.'

Funds Become Wrappers For ETFs in 401(k)s

July 7, 2008 - Hennion and Walch, a small New Jersey fund firm, is introducing ETFs into 401k plans by wrapping them in mutual funds.