Products February 13, 2017

Advicent Updates NaviPlan Compliance Programming

Advicent introduced new client report integration capabilities in its latest update of the NaviPlan financial planning software. 
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Advicent, provider of financial planning technology to the U.S. advisory industry, has announced new updates to its planning software tool, NaviPlan.

Features in NaviPlan 17.0 include “in-depth data reporting, updates to federal and state tax calculations, and various other improvements to offer accuracy and transparency for client plans.” All of this should promote compliance with Department of Labor conflict of interest standards, which the firm predicts will remain important even if/when the Trump administration succeeds in dialing back reforms in this area.  

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George Fischer, senior vice president for product, says the enhancements in the NaviPlan 17.0 update should benefit U.S. and Canadian advisory partners. “Firms can ensure they are both productive in the planning process and foster a transparent, collaborative client-adviser relationship,” he suggests.

“Regardless of what ultimately happens with the DOL rule, Advicent wants to ensure that our partners are prepared with the latest enhancement to support firm-wide compliance strategies,” agrees Angela Pecoraro, president and COO of Advicent. “Even if the rule is eliminated, each of the enhancements in 17.0 will empower our users in providing the best client-adviser experience available.”

The firm is particularly excited to be rolling out “synopsis reporting capabilities” allowing an adviser to provide a list of assumptions and inputs into the client’s plan in a single report, “ensuring the data is correct and the adviser is acting in the client’s best interest … This report presents client data in an easy-to-understand format and style that is consistent with other client reports. The Plan Analysis Synopsis report, like all other NaviPlan client reports, can be included within a client presentation as a compliance requirement, part of a template with other client reports, a special inclusion to a presentation, or a standalone report for clients.”

The firm is also highlighting an updated Quovo integration to include custodial feeds, as well as updates to U.S. federal and state tax calculation capabilities. To learn more, visit www.advicentsolutions.com. 

Data & Research February 13, 2017

Vanguard Finds Re-Enrollment Effective for Portfolio Diversification

Six months after a re-enrollment, 94% of participants and 74% of plan assets were in TDFs, while one year later, 92% of participants and 81% of plan assets were in TDFs, a case study by Vanguard showed.
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One year after a re-enrollment event, most participants remain invested in the default fund, Vanguard found in a case study.

Early in 2016, Vanguard examined the impact of a re-enrollment event within a large defined contribution (DC) plan, analyzing participant behavior immediately after the event and then six months later. It extended its analysis to study the behavior of the same participant cohort one year after the event.

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The original re-enrollment event occurred in two phases, beginning in December 2014 during the transfer of a large DC plan’s recordkeeping services to Vanguard. Because of the presence of a stable value investment fund, which required advance notification to the insurer, the full re-enrollment was not completed until June 2015.  After one year, the plan menu remained consistent in terms of the styles and number of funds offered; however, the bond funds and one stable value offering were changed.

Immediately after phase 1, at the end of December 2014, 10% of participants partially or fully opted out of the default fund and elected their own portfolios. After phase 2, this percentage increased slightly. One year later, 20% of participants were no longer solely invested in the default fund. However, Vanguard finds most of the increase is observed among participants who moved part of their portfolio out of the target-date default, and the percentage of participants who fully opt out remains low over the entire one-year period.

Vanguard notes that after the two-phase re-enrollment event, the trajectory of the median equity allocation aligned more closely to the target-date series. The distribution or variation around the glide path, representing individuals who chose to deviate from the single target-date default fund, grew wider as participant age increased. This widening of the distribution reflected later-than-normal retirement ages anticipated by some older investors, Vanguard found.

Six months after the re-enrollment, 94% of participants and 74% of plan assets were in target-date funds (TDF)s. One year later, 92% of participants and 81% of plan assets were in TDFs.

Vanguard concludes, “Over time, investment defaults remain ‘sticky.’ This reinforces our findings that re-enrollment is an effective strategy to improve portfolio diversification.”

A report about the case study can be found here.

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