Data & Research April 1, 2016

Strong Push for Self-Directed Investing

There is a strengthening push for more self-directed investing, especially among male investors labeling themselves as “anxious.” 
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A look at the “anxious male” investor segment reveals they are increasingly more self-directed, going from 62% self-directed in 2010 to 78% in 2015, according to new Hearts & Wallets research.

The findings are drawn from the Hearts & Wallets Investor Quantitative (IQ) Database, says Laura Varas, CEO and founder of Hearts & Wallets. She explains that the firm decided to do a deep dive into male investor behaviors in order to “move beyond gross generalizations” and to do more effective segmentation and analysis of this large and diverse group of investors.

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The research effort quickly led the firm to identify a group of potentially vulnerable “anxious male” investors. On average the group is not necessarily bad-off financially. In fact, as Varas explains, her firm has identified a “design persona” of an average male investor “who is anxious, self-directed and has $250,000 or more in investable assets.”

Crunching the numbers reveals this investor segment “often self-directs because of fee-aversion.” Varas notes that in stressful times, “self-reliance has become more appealing.” Digging deeper into the drivers of this effect, Hearts & Wallets finds anxious consumers “to be more likely to have a higher number and more sporadic relationships with financial advisers and online tools and resources than more confident investors.” 

“Anxious investors are slightly promiscuous, searching for an elusive fit, meaning lack of resources is both a cause and an effect of their anxiety,” Varas says. “This indicates a marketing opportunity to help break the cycle for this segment of male investors.” 

NEXT: Adviser opportunity among the anxious 

Only 30% of this segment “enjoys thinking about money,” Varas notes, but interestingly, “the anxious male is not risk averse. He is more concerned about missing out on investment growth than losing money in the short term.”

In fact, 60% in this segment agrees “missing out” is a bigger worry, of whom half (30% overall) strongly agree. In contrast, one in four confident self-directed males strongly agree that “losing money in the short term” is a bigger worry.

More than half (58%) of the anxious male segment “sees value in professional advice,” according to Hearts & Wallets. While some aspects of the group’s behavior are easily anticipated, others are a little harder to interpret. For example, a “stunningly high portion” of anxious males (61%) compared to other design personas developed by Hearts & Wallets is comfortable leaving money in a retirement plan sponsored by a company where they no longer work.

Varas concludes that the financial services industry “must develop well-defined segments and design personas to meet the needs of its customers—anxious males and others—to stay competitive.”

For more information about the firm’s research, visit www.heartsandwallets.com.

Products March 31, 2016

Investment Product and Service Launches

John Hancock Investments adds three retirement portfolios to TDF suite; RMB Capital adds to investment expertise; American Funds debuts Active Scorecard fund screening tool.
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John Hancock Investments Adds to Target-Date Suite

John Hancock Investments announced three new retirement portfolios being added to its suite of target-date offerings.

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Each new portfolio is designed for investors expecting to retire in or near the year 2060. The new portfolios aim to serve “many of today’s youngest defined contribution plan participants, as the Millennial generation—those born from 1981 to 2004—continues to grow its presence in the workforce.”

John Hancock cites figures from the Investment Company Institute, showing 35% of all 401(k) plan assets belonging to twenty-somethings were invested in target-date funds (TDFs).

The new offerings include two options with a glide path asset allocation strategy designed to help manage longevity risk. Both new John Hancock Retirement Living Portfolios follow a dynamic glide path that decreases equity exposure to about 50% through the target date; equities gradually taper down over the subsequent 20 years of retirement until reaching roughly 25%, the firm explains.

John Hancock Retirement Living through 2060 Portfolio’s asset allocation strategy is implemented with a combination of active open-end mutual funds and other investments. John Hancock Retirement Living through II 2060 Portfolio’s asset allocation strategy is implemented through a combination of index-tracking exchange-traded funds (ETFs) and other investments.

An additional, more conservative option emphasizing downside risk management is also being rolled out. The John Hancock Retirement Choices at 2060 Portfolio is designed for investors who wish to limit downside risk in the years leading up to retirement; it follows a dynamic glide path that aims for equity exposure of 8% at the target date, where it remains fixed thereafter. The portfolio’s asset allocation strategy is implemented through a combination of ETFs and other investments.

The portfolios are managed by John Hancock Asset Management’s co-heads of global asset allocation, Robert M. Boyda, Marcelle Daher, and Nathan W. Thooft.

NEXT: RMB Capital Looks to Tweak International Equity Approach 

RMB Capital Looks to Tweak International Equity Approach

Chicago-based RMB Capital announced today that Egor Rybakov, CFA, has joined RMB Asset Management as a senior vice president and portfolio manager.

“Rybakov brings to RMB the investment process he has honed for the past two decades—screening the universe of international equities to uncover mispriced quality companies expected to create long-term value,” the firm explains. “With the addition of Rybakov, RMB will ultimately be able to offer a variety of new international and global strategies—the first being a concentrated portfolio of non-U.S. companies across the market-cap spectrum.”

The firm anticipates strong benefits from implementing new fundamental, research-driven approaches under Rybakov’s guidance, focused on improving the investment processes and further expanding timely stock-picking capabilities.  

“Bringing Egor Rybakov on board is an exciting and meaningful development,” adds Chris Graff, partner and director of RMB Asset Management. “We now cover the globe.”

Throughout his career, Rybakov says he has “focused on discovering mispriced quality companies with durable operations, strong financials, and prudent management teams. Such businesses typically outperform over the long term. My disciplined and time-tested investment process balances pursuit for future value creation with downside protection, offering opportunities for savvy investors to gain exposure to international markets in a prudent manner.”

Prior to joining RMB, Rybakov was senior vice president and portfolio manager at Keeley Asset Management’s global equities practice. Previously, he held international equity portfolio management and research positions at a number of firms, including ENR Investments, Principal Global Investors/EDGE AM, affiliates of Nuveen Investments – Tradewinds Global Investors & SBAM, as well as Thornburg Investment Management.

More information about the firm is at www.rmbcap.com.

NEXT: America Funds Reveals Active Scorecard 

American Funds Reveals Active Scorecard

The new Active Scorecard tool produced by American Funds using the entire Morningstar mutual fund database can help advisers and sponsors identify groups of “select active” funds that consistently beat their index, the firm says.

“Popular belief is that active fund managers can’t beat their stock market benchmarks with any consistency over time,” the firm explains. “That perception, in turn, has driven investors to pour trillions of dollars into index funds and to look at all actively managed funds as a collective average.”

Using the new Active Scorecard tool, investors dig deeper into the active investment picture. They can apply two useful screens to groups of active investments—namely, having low expense ratios and higher manager ownership—which brings top performers to the fore.

While no guarantee of future results, funds that make it through the screening process have beat their indexes 55% of the time on a rolling one-year basis; 64% of the time on a rolling three-year basis; 77% of the time on a rolling five year basis; and 95% of the time on a rolling ten-year basis, according to the firm.

“More importantly, the Active Scorecard dispels perceptions that it’s nearly impossible to identify active funds that are likely to beat their actively managed peers (or the index) with any consistency,” the firm concludes. “The Active Scorecard pushes back on claims by index proponents such as the SPIVA Scorecard that present average results of all active managers. This approach does not distinguish the subset of active funds that outpaced their benchmarks over the long-term, aside from other methodological issues that emphasize annual results as opposed to how a real world investor builds wealth over longer horizons.”

A demonstration of the tool is available here.

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