Investment advice is gaining steam. Most recently, three firms announced investment advice ventures.
In New York, Forstmann-Leff International and Investment Technologies formed an alliance to provide investment advice for 401(k) plan participants.
Forstmann-Leff International will provide research and key investment assumptions and forecasts behind Expert Portfolio Advisor, Investment Technologies' Internet-based advice system.
"The integrity of the underlying projections of market performance is the single most important factor in determining the success of an advice program," said Brian Rom, Investment Technologies president.
"Unlike other Internet advice systems, we will also be providing advice on all the family's investible assets, not just the participant's 401(k)."
In Boston, Scudder Defined Contribution Services is teaming up with Financial Engines Inc., Palo Alto, Calif., to provide investment advice to defined contribution plan participants.
Financial Engines will serve as investment adviser and fiduciary. For now, Financial Engines' Internet-based services will be the only participant advice service Scudder will offer to plan sponsors, said Jeanne Murphy, a spokeswoman for parent company Scudder Kemper Investments.
And in Charlotte, N.C., TeamVest launched a participant 401(k) investment advice Internet service through Quicken.com.
For the past year, TeamVest has been providing record keeping and consulting services for 401(k) plans. The alliance with Intuit will allow TeamVest to market 401(k) advice directly to plan participants, said David Evans, director of advisory services for TeamVest.
Meanwhile, Credit Suisse Asset Management, New York, and 401k Forum, San Francisco, formed an alliance offering plan sponsors high-level education online without offering investment advice.
401k Guidance Online was designed by 401k Forum specifically for Credit Suisse to provide independent analysis of plan investment options, said David Peckman, vice president of marketing for 401k Forum.
The Internet-based service recommends asset allocations to plan participants and identifies the funds that would be appropriate given those recommendations, said Robert Birnbaum, managing director of Credit Suisse Asset Management's defined contribution plan business. But the service will not instruct participants as to where they should invest their money, he added.
"The service is an education and guidance solution within the guidelines of the interpretive bulletin," Mr. Peckman said. The guidelines, released last year by the Department of Labor, gave guidance on the difference between education and investment advice, which could under some circumstances require prohibited transaction exemptions from the DOL.
Credit Suisse is not planning to add investment advice in the near future, Mr. Birnbaum said. Plan sponsors are cautious about including investment advice because of potential fiduciary liability issues, he said.
Groups produce standard cost reporting form
WASHINGTON -- At the Labor Department's request, the Investment Company Institute, the American Bankers Association and American Council of Life Insurance jointly created a standardized form for small businesses that asks 401(k) plan vendors to show the total cost and cost of various elements of the program.
The Labor Department opted for this cooperative approach over regulation.
"What we are trying to do here is take the mystery out of the process," Labor Secretary Alexis M. Herman said in a news conference announcing the effort. The form, she said, would "make the information more user friendly so employers can fulfill their fiduciary obligation and compare apples to apples."
The form requires vendors to summarize investment fees, administrative fees, start-up and service provider termination-related charges, along with fees for separate portfolios and other services.
Bodine plans to add self-directed brokerage option
BRIDGEPORT, Conn. -- Bodine Corp. will add self-directed brokerage options to both its 401(k) and profit-sharing plans through third-party administrator Fleet Investment Management Jan. 1. The plans, which have combined assets of $20 million, now will have 10 options, said Maria Roy, director of human resources.
Vermont Employees to pick bundled service provider
MONTPELIER, Vt. -- The Vermont Municipal Employees Retirement System will pick a bundled service provider by the fall for a new optional defined contribution plan, said James H. Douglas, state treasurer.
The system will choose from among Fidelity Investments, Great-West Life, ICMA and Copeland -- the four that were shortlisted in the state's search for a similar provider for the State of Vermont Defined Contribution Retirement Plan, which became operational Jan. 1. That plan, which had $23 million in assets at the end of March, picked Fidelity as its bundled service provider.
New and current Vermont municipal employees will have the choice of participating in the new defined contribution plan, which will kick off July 1, 2000, Mr. Douglas said.
Fidelity broadens audience for communications offerings
BOSTON -- Fidelity Investments is offering its communication programs to plan sponsors that are not using Fidelity as their full-service defined contribution provider.
The service is aimed at offering pre-retirement and rollover communication and education programs to 401(k), 403(b) and 457 plan sponsors. The pre-retirement planning workshop includes segments on analyzing household balance sheets, explaining distribution options, converting assets into retirement income and understanding estate planning.
