SAN FRANCISCO - The Charles Schwab Group launched its first bundled defined contribution plan program, targeted at small and midsized sponsors.
The program will offer institutional pricing on more than 600 mutual funds from Schwab's One Source mutual fund alliance. Funds from outside the One Source family also may be included at a sponsor's request. Schwab will offer investment management consulting services to help sponsors narrow the universe of available funds to optimum choices for their plan. Schwab's Personal Choice self-directed brokerage option is also available within the program.
Through two subsidiaries, Hampton Pension Service and TrustMark, the program will offer daily valued record keeping. Schwab also will provide a toll-free voice-response system, employee education and investment education that can be customized. PC-based asset allocation software, perhaps with access from the Internet and online services, might be added in the future, said David Peckman, vice president of marketing. Personal financial planning services also are in development.
Schwab and Hampton, which was acquired last year, already have several hundred shared clients, averaging 500 participants, which will be given a chance to move to the bundled service.
CHICAGO - The Profit Sharing/401(k) Council of America released two papers that redefine the retirement system and make recommendations both for increasing individual responsibility for retirement benefits and decreasing government regulation of corporate sponsored defined contribution plans.
In developing the first paper, "Helping Americans to Help Themselves: A Framework for Financial Security in Retirement," the PSCA considered the effects that changes in demographics, lifestyles, the business environment and national savings patterns have had on Americans' ability to prepare for retirement. The paper urges government support for flexible savings plans and highlights the need for greater public education.
The second paper,"Helping Americans to Help Themselves: The Role of Profit-Sharing/401(k) Plans in the Retirement-Income Security Framework," specifically discusses the role profit-sharing and 401(k) plans play in retirement preparedness. An easing of government restrictions on contribution levels is pushed as a way to boost savings levels.
PRINCETON, N.J. - A Merrill Lynch survey indicates that when employers provide retirement planning education, the rate of employee participation rises almost 12%. The survey found the average rate of plan participation was 84% with investment education and only 72% without education.
The survey also showed employees receiving retirement education have: An average annual increase of $2,968 in their 401(k) account balances more than those whose employers do not provide retirement planning education; have a 2.2% higher rate of saving as a percentage of annual income than those who do not receive education; and tend to rely less on advice from friends and family.
The study, sponsored by the National Science Foundation and Merrill Lynch, was conducted by Douglas Bernheim of Stanford University and the National Bureau of Economic Research, in tandem with the 1995 Baby Boom Retirement Index study of 2,055 households.
In conjunction with the survey, Merrill Lynch announced its Group Employee Services has expanded and enhanced its communications unit to focus on employee education and financial planning. An intensive two-year curriculum is being developed. New planning tools, such as interactive CD-ROM an online curriculum, are under development.
WESTERN SPRINGS, Ill. - The Center for Due Diligence, a 401(k) research, consulting and publishing firm, is introducing two products this spring.
One is a newsletter designed for participants in defined contribution plans offering a self-directed brokerage option, and the second is a fund search service.
The newsletter, the "Quintessential Quartile," will help participants select fund options for their SBO by publishing a list of equity funds that pass multiple screens including long-term and consistent performance, fees, investment style and portfolio manager tenure.
The aim of the newsletter will be to make mutual fund investing less complicated by narrowing the universe of equity funds to only those suitable for retirement accounts.
The funds on the multiscreened list will only include no-load funds. An additional list of top-performing equity funds, published quarterly, will include funds with sales loads, but will provide performance on a load-adjusted basis. Load-adjusted performance is a truer measurement of performance, but is not normally provided to plan participants, said Philip G. Chiricotti, president.
The second program, the fund search service, will help participants select investments for their SBO through a mechanical search process. Participants will complete a questionnaire that will provide risk tolerance preference for use in fund selection.
Both programs likely will be distributed through vendors providing SBO options to plans, said Mr. Chiricotti, but he did not rule out direct distribution to plan participants through retail channels.
KANSAS CITY, Mo. - Twentieth Century Retirement Plan Services Group introduced a bundled 401(k) program for small to midsized sponsors with $3 million to $10 million in plan assets.
The program allows companies to select up to 12 investment options from 40 diversified Twentieth Century and The Benham Group mutual funds, as well as an externally managed GIC pooled fund.
Also offered within the turnkey program are daily valued record keeping, administration and trust services, an automated voice-response system with access to operator assistance, compliance and government reporting, and employee communications and investment education.
ST. LOUIS - Money manager Mississippi Valley Advisors and third-party administrator The Legend Group teamed up to offer 403(b) bundled services to Midwestern not-for-profit organizations.
Mississippi Valley's ARCH family of 11 mutual funds will be offered within a daily valued record-keeping program from The Legend Group, which specializes in 403(b) administration.
The Legend Group also will handle the marketing of the program to universities, school districts, hospitals and other non-profits in Missouri and Kansas, where Mississippi Valley's parent company, Mercantile Bank, has a regional presence. Marketing efforts will expand to Iowa, Arkansas and Illinois later.
SAN DIEGO - Nicholas-Applegate Capital Management introduced a comprehensive 401(k) program geared to smaller high-technology companies, consulting and engineering firms, and other professional service organizations.
Fewer than 25% of smaller companies offer 401(k) plans, according to firm officials.
The program includes Nicholas-Applegate mutual funds, payroll and asset allocation software; daily valuation available through a 24-hour toll-free number; and customized employee communications and education programs.
NEW YORK - Chase Manhattan Bank N.A. introduced a quasi-bundled service for corporate defined contribution plan sponsors with more than $100 million.
Chase Manhattan Global Investor Services will provide trust services, coupled with 50 mutual funds from 15 external managers, as well as the Chase managed VISTA mutual funds.
Some of the mutual fund families include AIM, American Funds, Neuberger & Berman, PIMCO and Scudder, Stevens & Clark.
Employers also may include company stock, actively managed and GIC/stable value options in their plans in addition to the standard mutual fund offerings.
Godwins, Booke & Dickenson, Winston-Salem, N.C., will provide daily valued record-keeping services, an automated voice-response system and employee education and communication.
Godwins, Booke & Dickenson also will provide train-the-trainer services for employee education and may conducting the meetings for clients directly if demand requires it, said William Hogan, vice president and product manager for Chase employee benefit services.
Another division of Chase Manhattan provided quasi-bundled services to small and midsized defined contribution plan sponsors since early last year.
NEW YORK - Buck Consultants Inc. added Scudder, Stevens & Clark Inc., Boston, to its defined contribution plan alliance, 401(k) Connections.
Buck's alliance now offers more than 350 mutual funds, GIC funds, and commingled funds from 17 managers, including AIM Management Group Inc., Capital Guardian Trust Co., INVESCO Funds Group Inc., The Franklin/Templeton Group, PIMCO Advisors L.P., Neuberger & Berman Management Inc. and Twentieth Century Investors Inc.
BOSTON - The new jointly held total benefits outsourcing subsidiary of State Street Boston Corp. and Watson Wyatt Worldwide will be named Wellspring Resources, the companies announced. As expected, the transaction will become effective April 1 and will be based in Washington and Jacksonville, Fla.
State Street also will complete its outright acquisition of Watson Wyatt's daily-valued record keeping business. The Watson Wyatt Preferred Choice program, which services 59 plan sponsors with 300,000 plan participants, will be transferred to State Street. The 120 plan administrators and consultants at the record-keeping service center will become State Street employees.
PITTSBURGH - PNC Bank Corp. has made a number of enhancements to its 401(k) product, Vested Interest, including asset allocation software and a workbook, a new employee education package and several operational improvements.
The bank also formed strategic alliances with four mutual fund families, enabling it to offer 57 additional fund choices to participants, along with its proprietary Compass Capital Funds and the PNC Bank Profile Funds.
The new funds are managed by Fidelity Investments Institutional Services Co., INVESCO Funds Group, Janus Capital Corp. and Scudder, Stevens & Clark Inc.
PNC's operational enhancements include the ability to take deferral changes over the telephone, improvements to the voice-response system, the addition of Spanish language capabilities and customer remote access.
ST. PAUL, Minn. - Minnesota Mutual Life Insurance Co. introduced a turnkey 401(k) bundled service for small companies with 50 to 500 employees.
The program, AccuServe, offers daily-valued record keeping, provided by Minnesota Mutual; trust, administration, employee communication and investment education services.
Seven commingled funds managed by Minnesota Mutual's subsidiary, Advantus Capital Management Co. of St. Paul, are offered.
Fifteen additional funds are available through an alliance, including funds from Fidelity Investments Institutional Services; The Vanguard Group of Investment Cos.; Scudder, Stevens & Clark Inc.; PBGH; Templeton International; Janus Funds; Warburg Pincus Counsellors Inc.; and Parnassus Financial Management.
Small plan sponsors can choose how administrative fees are assessed - either subtracted from asset charges, which shares administrative costs with employees, or billed directly as a corporate expense.
Additionally, as plan assets grow, administrative fees will be reduced, said Joan Curtiss, manager of pension marketing, although she couldn't say by how much, because each client will use different services.
Marlene Givant Star contributed to this column.