The Markets August 17, 2023

Investment Product and Service Launches

AmericanTCs, Allianz come to market with in-plan annuities; Lincoln Financial upgrades its RILA to combat market volatility; Altruist adds multi-account onboarding; and more.

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AmericanTCS Partners With Allianz Life on In-Plan Annuities 

Two AmericanTCS subsidiaries, American Trust Retirement and American Trust Custody, are partnering with Allianz Life Insurance Co. of North America to add guaranteed lifetime income annuity options to defined contribution retirement plans on the American Trust Platform.

The Allianz Lifetime Income+ Annuity is a fixed indexed annuity that can be added to a DC retirement plan on the American Trust Platform through a managed account. The product is designed to help participants manage issues such as outliving their money, inflation and market volatility, according to the companies.

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“Historically, guaranteed income options have lacked accessibility, portability, and flexibility, or they were simply too complicated for participants to navigate,” Brian Lenz, chief sales officer at AmericanTCS, said in a statement. “By leveraging Allianz Lifetime Income+ and making guaranteed income for life an optional feature within our managed account infrastructure, we have addressed those drawbacks at a very compelling price point.”

The annuities features include:

  • Participants can choose when income starts, pause income payments and withdraw accumulation value with no surrender charges;

  • Benefits, guarantees and pricing remain if a participant leaves the plan or the plan removes the option from the lineup; and

  • Fees are guaranteed not to increase, even if the participant leaves the plan and rolls the annuity into an individual retirement account.

AmericanTCS supports more than 300,0000 retirement plans.

Lincoln Adds to RILA Capabilities to Protect Against Volatility

 Lincoln Financial Group has enhanced its registered index-linked annuity, the Lincoln Level Advantage, with two crediting strategies designed to allow for more upside in down markets.

Dual Performance Trigger and Dual15 Plus are designed to provide a solution for investors concerned with market volatility by offering protection in up, flat and down markets without missing out on investment opportunities. The investment manager brings the solution to market as money market yields are averaging 4 to 5% for the first time in more than a decade and investors are choosing to hold their cash, bringing cash balances to a record high of $5.4 trillion, the firm noted in its announcement.

“Protecting assets from inflation and market volatility has become a top priority for investors in recent years, but that has created significant increases in cash holding which can come at a big cost long term,” Daniel Herr, Lincoln Financial senior vice president of annuity product management, said in a statement. “Investors who are fearful of the market can stop parking assets in cash and instead stay invested in a way that not only protects them against market volatility, but also gives them the opportunity for growth in flat and certain down-market scenarios.”

The Dual Performance Trigger offers a one-year term, providing investors the flexibility to reinvest or reallocate every year, while Dual15 Plus offers a six-year term.

“Since 1972, the S&P 500 Index declined 52 out of 529 times over a 6-year period. With Dual15 Plus, 50 of those declines would have resulted in positive returns,” Tim Seifert, Lincoln Financial’s senior vice president and head of retirement solutions distribution, said in a statement. “This is just one example of the impact these crediting strategies can have as part of a holistic financial plan.”

Altruist Offers RIAs Multiple Account Openings

The registered investment adviser custodian Altruist has made multiple account bundling available in its onboarding process to save time for advisers and their clients.

Altruist’s new onboarding process is designed to cut down on the “tedious activity” of repeatedly entering client details, with the average client household for advisers using the custodian’s platform having between two and 10 accounts, according to the announcement. With the new process, one email prompts clients to open multiple accounts with fewer steps and includes individual, joint, retirement, trust and custodial options.

“Simple, efficient processes help RIAs improve their operations and better serve their clients,” Harpreet Ahluwalia, chief product officer at Altruist, said in a statement. “We will continue building the product that RIAs deserve, so they can focus more on the work that matters: delivering exceptional financial advice and service.”

Save Launches Retirement Savings Program

Financial advisory Save Advisers LLC has launched a platform that makes its advisory technology available to insurance companies and retirement savers.

Market Trust invests in securities, cash and fixed annuities that the advisory expects to return more than traditional high-yield interest savings accounts or market-driven retirement solutions, according to an announcement. The investment portfolio gains can be withdrawn at any time and are subject to more beneficial capital gains tax treatment without a penalty.

Save’s first Market Trust annuities partner is Gainbridge Insurance Agency LLC, a business-to-business “insurance-as-a-service” platform developed by Group 1001 that offers turnkey retirement options. Annuities purchased in connection with the Market Trust program will be issued by Clear Spring Life and Annuity Co., an affiliate of Gainbridge, according to the announcement.
Data & Research August 17, 2023

WTW: Employers Ramping Up Nonqualified Saving Options to Draw Key Execs

75% of employers made changes or plan to make improvements to their nonqualified deferred compensation plans, according to a survey.

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Employers are focused on upgrading their nonqualified deferred compensation plans in the ongoing tight labor market, to the benefit of key executives and higher-paid employees, according to a Willis Towers Watson survey released Wednesday.

Of 396 U.S. employers, three-quarters (75%) either made changes to their nonqualified defined contribution retirement plans in the last two years or plan to make changes in the next two years, the advisory and brokerage found. Employers with nonqualified defined benefit plans clocked in a bit lower, with 55% either having made changes in the past two years or having plans to in the next two years.

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Attracting and retaining key talent was the top reason given for offering a nonqualified retirement plan, according to WTW. More than one-third (37%) of respondents cited attraction and retention as the top reason for offering the plan, while 25% ranked it second.

“Employer interest in nonqualified retirement plans is at an all-time high. In fact, we have helped clients implement more new plans and redesign existing plans in the past two years than in prior years,” Chris West, senior director and leader of WTW’s nonqualified plans specialty group, said in a statement.

The majority of large U.S. employers are already offering nonqualified retirement plans to executives and high earners, according to WTW, with the plans allowing for advantages such as pre-tax deferral of compensation, employer contributions and/or compensation amounts that cannot be captured in a qualified plan due to IRS limits. Nonqualified plans are also typically not subject to rules governed by the Employee Retirement Income Security Act.  

Employers are looking to ramp up those offerings, according to West. The survey found that 72% of employees with DC plans are focused on “improving the participant experience” in their nonqualified plans, compared with 56% with DB plans.

“While employers have been investing time and effort into their nonqualified plans, many recognize they aren’t getting or providing the value intended,” West said. “As a result, employers are looking to improve the employee experience through more focused communication and education as part of their redesign strategy.”

DC plan sponsors cited communication (52%), education (47%) and financial counseling (28%) as key focus areas for their plans over the next two years. Meanwhile, more than half of respondents (56%) offer only a nonqualified DC retirement plan, while 35% provide both a nonqualified DC and DB plan.

Nearly one in four respondents (23%) with a nonqualified DB plan has either conducted de-risking actions in their DB nonqualified plan or intends to conduct de-risking.

The firm also found that 60% of DC respondents and 47% of DB respondents informally fund their nonqualified plans by setting aside an asset to provide a source for disbursements and to mitigate risk. Mutual funds are the most prevalent investment vehicle in those trusts, with 60% of respondents that fund their DC nonqualified plans utilizing mutual funds, and 43% of respondents funding their DB plans with mutual funds.

“We see that mutual funds have surpassed historical vehicles, such as corporate-owned life insurance, as being the most prevalent investment vehicle,” Beth Ashmore, WTW’s managing director of North American retirement, said in a statement.

In May and June, 396 U.S. employers that offer a nonqualified retirement plan participated in the WTW Nonqualified Retirement Benefit Survey. Respondents employed a total of 7.5 million workers and were a mix of for-profit and nonprofit organizations.

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