Deals & People December 3, 2010

Legg Mason Creates Retirement Think Tank

Legg Mason, a global asset management firm, has created the Retirement Advisory Council, bringing together 14 industry leaders to delve into the major challenges facing the retirement industry.   
Reported by

The message at the first gathering of the Council was clear: the industry needs to come up with new ideas in order to help the American worker save more money for retirement.  Those ideas cannot be found in products alone – there needs to be a more “holistic approach” moving forward. There was a consensus that the industry is on the “precipice of change,” and that change can either be extremely positive or negative – the council’s goal is to ensure the change is positive.

The 14 Council members are:

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  • Ted Benna, President of Malvern Benefits Corporation 401(k) Association
  • Thomas Clark, Jr., President, Lockton Financial Group
  • Paul D’Aiutolo, Vice President, UBS Wealth Management
  • Charles Epstein, Founder, The 401(k) Coach Program
  • Robert L. Francis, Chief Operating Officer, National Retirement Partners
  • Joseph Frustaglio, Vice President, Retirement Plans Sales, National Sales Manager, Nationwide
  • Gary Kleinschmidt, Head of Retirement Specialists, Legg Mason
  • Dave Master, Managing Director Strategy and Business Development, Legg Mason
  • Joseph Masterson, Senior Vice President, Diversified Investment Advisors
  • Joe Mrozek, National Sales Manager – Retirement, Bank of America Merrill Lynch
  • Edward O’Connor, Managing Director, Head of Retirement Services, Morgan Stanley Smith Barney
  • Michael Shamburger, Vice President, National Sales Manager 401k, The Hartford Financial Services Group
  • Scott Sides, Senior Vice President& Corporate Benefits Director, Morgan Stanley Smith Barney
  • Marcia Wagner, Managing Partner, Wagner Law Group

The reality is, none of the legs on the traditional “three-legged stool” of retirement are strong enough, said Wagner.  The industry needs to break down this stool and come up with ideas that encompass “innovative simplicity,” Francis remarked.  He said that the industry has been paralyzed by complexity and we need to get back to the bottom line: save more money.   

“Save more money” was echoed around the room.  Several members said the biggest change that needs to come to the industry is more self-discipline from the participants.  They have the “responsibility and opportunity” to take control of their future, said O’Connor, two things that are equal parts exciting and daunting.   

“Coach” Epstein painted this metaphor for the group.  He said peoples’ two biggest assets are their home and their retirement savings.  People take their home mortgage seriously – they have a strict plan to pay off the loan in 30 years; they respect it with utmost diligence.  Retirement savings, on the other hand, are treated like a casino, he said.  What the industry needs is a retirement mortgage – you have 40 years to get to this amount of money – contribute to your plan as if you were paying your mortgage.   

The Markets December 3, 2010

REITs Lose Ground in November

REITs nearly tripled the performance of the S&P 500 Index in the first 11 months of the year, although they lost ground in November, according to new data.
Reported by

A news release from the National Association of Real Estate Investment Trusts (NAREIT) said the total return of the FTSE NAREIT Equity REIT Index was 22.25% and the total return of the FTSE NAREIT All REITs Index was 21.88% for the first 11 months of the year compared to 7.86% for the S&P 500.

In November, the FTSE NAREIT Equity REITs Index lost 1.96% and the FTSE NAREIT All REITs Index lost 1.62% while the S&P 500 gained 0.01%.

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According to the NAREIT data, all sectors of the REIT market were in the black and all but two delivered strong double-digit returns on a year-to-date basis through November 30. Top performing sectors were Apartments (up 41.04%), Free-standing Retail (up 35.28%), Regional Malls (up 32.65%), Lodging/Resorts (up 31.29%) and Shopping Centers (up 23.56%).

On a one-year basis through November 30, the FTSE NAREIT Equity REIT Index delivered a total return of 30.99% and the FTSE NAREIT All REITs Index delivered a return of 29.72% compared to 9.94% for the S&P 500, the NAREIT data showed. 

The FTSE NAREIT Equity REIT Index has outpaced the S&P 500 for the past 1-, 3-, 5- , 10-, 15-, 20-, 25-, 30-, and 35-year periods. The REIT index delivered positive returns for eight of those nine periods and double-digit returns for seven of the nine periods. REITs also continued to reward income investors in the first 11 months of 2010, NAREIT said. 

The FTSE NAREIT All REITs Index cash dividend yield was 4.58% and the FTSE NAREIT Equity REIT Index cash dividend yield was 3.76% at the end of November, while the S&P 500’s dividend yield was 1.98% and the yield on 10- year U.S. Treasuries was 2.79%.

Finally, NAREIT said, compared to last year’s total $34.7 billion in equity and debt raised, REITs so far this year have raised $42.7 billion — $21.9 billion in secondary equity common and preferred share offerings; $18.8 billion in unsecured debt and $2 billion in nine IPOs.

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