Retirement Plan Tidbits

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Apr 16, 2006 4:15 pm

I read the following tidbits in CFO Magazine, in an article dealing with company retirement plans. Although much of what the article said, we already know (if you market retirement plans). However, there some tidbits that caught my eye, that you might find interesting, as well (paraphrased):


A study by Hewitt Associates found that, in companies that offer only 401(k)s as the only source of retirement benefits, even those employees who actively contribute could face a retirement income shortfall of 27%.


CHOICE OVERLOAD:


A study of the 647 defined-contribution plans of the Vanguard Group records spanning 800,000 employees, found that for every 10 funds added to a plan's menu, the probability that an employee will take part in a retirement savings plan drops 2%.


"Lifestyle"-type funds are the growing trend for retirement plans. They appear to simplify the investment process for the participants.


Apr 16, 2006 10:39 pm

If you have no clue, why wouldn't you choose a Lifestyle Fund? This is where the industry is headed.

Apr 16, 2006 10:55 pm

I agree that is what people should do but they won't.  When they see the high retrns other funds post they will feel like they are missing the boat and switch into a fund at the wrong time and lose lose lose

Apr 17, 2006 9:58 am
doberman:

I read the following tidbits in CFO Magazine, in an article dealing with company retirement plans. Although much of what the article said, we already know (if you market retirement plans). However, there some tidbits that caught my eye, that you might find interesting, as well (paraphrased):


A study by Hewitt Associates found that, in companies that offer only 401(k)s as the only source of retirement benefits, even those employees who actively contribute could face a retirement income shortfall of 27%.


CHOICE OVERLOAD:


A study of the 647 defined-contribution plans of the Vanguard Group records spanning 800,000 employees, found that for every 10 funds added to a plan's menu, the probability that an employee will take part in a retirement savings plan drops 2%.


"Lifestyle"-type funds are the growing trend for retirement plans. They appear to simplify the investment process for the participants.




I have recently made a decision to start using asset allocation funds-such as the MFS series-for ALL small accounts, say under 25k.  Glad I did.  Should have done it long ago. Then again, these are relatively new animals as far as being available to the retail investor.  Sort of a 'new and improved' twist on the ole' balanced fund idea.

Apr 17, 2006 10:56 am

I also use the MFS Allocation funds for smaller accounts. The underlying funds are good performers, and MFS actively rebalances using new money inflow....

Apr 17, 2006 12:15 pm

Evergreen's Asset Allocation fund is a much better option than MFS. It is run by GMO, an very well-respected instituional money manager. The only issue is the additional fee Evergree tack on, but they are making it available to retail investors. The ticker is EAAFX.    

Apr 17, 2006 1:07 pm

i have also used the blackrock asset allocation fund (brbcx).

Apr 17, 2006 5:47 pm

I use Accessor.  They have six models, and have awesome underlying managers such as Wellington, Blackrock, JPMorgan, etc etc.


From the website you can also create a nice Investment Policy Statement for the client (if you want).

www.accessor.com

Geez I sound like a wholesaler.

Apr 17, 2006 9:22 pm
BankFC:

I use Accessor.  They have six models, and have awesome underlying managers such as Wellington, Blackrock, JPMorgan, etc etc.


From the website you can also create a nice Investment Policy Statement for the client (if you want).

www.accessor.com

Geez I sound like a wholesaler.



Thanks for the heads-up!

Apr 17, 2006 10:22 pm
fired?:

Evergreen's Asset Allocation fund is a much better option than MFS. It is run by GMO, an very well-respected instituional money manager. The only issue is the additional fee Evergree tack on, but they are making it available to retail investors. The ticker is EAAFX.    


Expenses have been lowered to 1.02% for the A-share.  Great fund; never has had a negative performance year.  As far as I'm concerned, Grantham is a genious.

Apr 17, 2006 10:25 pm

Goldman's Asset Allocation funds (four models) have delivered excellent results as well.  They also have a quarterly piece that comes out on a very timely basis that you can forward to clients.  It shows how each of the models has been re-wieghted for the current quarter, with a great economic commentary correlating the pragmatism of each portfolio.  I like using it for smaller IRA and Roth accounts.

Apr 17, 2006 10:42 pm

Isn't that a preferred family at jones? You mean they have good fund choices outside of American???

Apr 17, 2006 11:22 pm
noggin:

Isn't that a preferred family at jones? You mean they have good fund choices outside of American???


Yeah, it just that the Jones guys don't use them.