State Street Global Advisors Inc., Boston, plans to add enhancements to its bundled 401(k) service product, State Street Solutions.
The program, targeted at plans with 100 to 5,000 employees, will add an internally managed international equity fund investing in emerging markets in March, if registration with the Securities and Exchange Commission proceeds as scheduled.
State Street is also searching for an outside manager to run a more traditional international EAFE equity fund, aiming to find a company with "brand-name recognition to add value to the program," said Jim Wironen, managing director.
State Street also is developing a series of asset allocation funds designed to meet participants' age and risk tolerance requirements, which should be debuted later in the year.
State Street Solutions now offers record keeping, employee education and communications, trust services, and a 24-hour voice response system. State Street also provides daily valued investment options, including eight of its own Seven Seas mutual funds, the Fidelity Growth & Income Fund, Neuberger & Berman's Guardian fund, and a participant self-directed brokerage option. State Street's own mutual fund offerings vary from one money market fund and three bond to four equity funds, including an S&P 500 index fund and S&P Mid-Cap index fund.
Money in Motion update
The 1994 edition of Money in Motion, a financial planning program, is available from the Ayco Corp., Albany, N.Y., a subsidiary of American Express Corp., New York.
The basic service, priced at about $75 per participant, includes a series of ten guidebooks for employees, covering retirement planning, savings, 401(k) asset allocation, tax and estate planning, insurance coverage, and college funding. The basic program also includes a monthly educational newsletter, targeted to employees.
Ayco's employee benefit education program also includes optional services, available at extra cost. The InfoLine option gives employees access to live financial counselors through a toll free telephone system, available with the basic service for about $90 per participant. One optional service, available for $15,000 annually, customizes information given to participants, according to specific options offered with a company's benefits program, and offers additional specific educational materials. Employee education seminars are also available on-site, for $2,500 per meeting. Prices for all services are lowered each year the company uses the service.
Fortune 500 companies using Money in Motion and enhanced options include Mobil Oil Corp.; AT&T; BellSouth Corp.; Hershey Foods Corp.; Hercules Inc.; and United Technologies Corp. Payment for the program varies by company. Some employers subsidize all or part of the cost, while others deduct the cost of the program from a participant's salary.
401(k) Association launched
A new lobbying group, the 401(k) Association, has been formed to protect the interests of 401(k) plans and participants from over-regulation through lobbying in Washington.
Theodore Benna founded the Langhorne, Pa., group in reaction to recent government legislation, including the 20% withholding tax on 401(k) distributions and the $150,00 salary limit for calculating defined contribution payments.
Mr. Benna is credited with receiving Internal Revenue Service approval in 1980 for the first-ever 401(k) plan.
The 401(k) Association has appointed Stuart M. Lewis, an employee benefits attorney with Washington-based Silverstein & Mullins, as a lobbyist on Capitol Hill to monitor and influence legislation affecting 401(k) plans and participants. Mr.Benna is also active in lobbying efforts, working with Mr. Lewis, who has been active in employee benefit law for 25 years.
The association also intends to develop participant investment education materials and increase public awareness of the benefits of 401(k) plans through an advertising campaign. Mr. Benna said he expects as many as 25,000 members to join in 1994.
Mr. Benna said the association is encouraging individuals to join, rather than corporations, because legislators are more likely to be influenced by organizations representing constituent voters.
The individual membership fee is $35 annually; the corporate-sponsored membership package is $250, which allows eight representatives to be designated by the company. Included with the corporate sponsorship is Wealth Builder, an integrated financial planning software program for use by participants.
Founders starts new funds
Founders Asset Management, Denver, started two no-load mutual funds, targeted to institutional investors but open to retail investors.
The Passport Fund invests in international equities, of companies that generally have market capitalizations or annual revenues of less than $1 billion. The fund invests in both established and emerging markets.
The Opportunity Bond Fund is a contrarian fund, normally investing at least 65% of the portfolio in domestic investment-grade bonds with maturities greater than one year. The fund also opportunistically invests in alternative market sectors, with a maximum investment of 30% in junk bonds and a maximum of 25% in foreign bonds.