Products January 19, 2010

SunGard Launches Financial Planning Tools for Advisers’ Clients

SunGard has launched MyWealthSeries, a set of online financial planning tools for advisers to offer their clients and prospects from their own Web sites.
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The tools use financial planning concepts and calculators from SunGard’s WealthStation wealth management platform. SunGard said the tools give advisers a cost-effective way to offer tools that will help their clients become more informed and engaged in the management of their wealth.

MyWealthServices can be purchased as a pay-as-you-go feature, rather than requiring advisers to use the WealthStation platform. The new offering is available as a Software-as-a-Service offering via SunGard’s Infinity storefront, which is a new initiative allowing financial institutions to integrate SunGard components with their own proprietary or third-party components.

SunGard said the new tools can help advisers stand out to investors, who are more sophisticated than in years past, are more comfortable with technology, and demand more insight and transparency into the investment process. Furthermore, investors seek more guidance and service levels from advisers.

“Service is a key differentiator for advisers, and by placing technology at the center of the investor experience, advisers stand to regain investor trust and ultimately grow their businesses,” said Blaine Maxfield, chief operating officer of SunGard’s wealth management business, in a news release. “SunGard’s MyWealthSeries tools give investors the ability to actively participate in the financial planning process and collaborate with their advisers.”

According to the company, MyWealthSeries helps firms provide investors with calculation tools based on four main financial planning concepts: education, retirement, survivorship, and asset allocation. Education projects future higher education funding needs based on current resources and calculates savings needed to fund the goal. Retirement projects retirement funding needs based on current resources, including Social Security, and calculates monthly savings needed to fully fund the retirement goal. Survivorship projects available income and determines if survivors are likely to experience a financial shortfall, and Asset Allocation calculates recommended asset allocation by analyzing current risk tolerance.
After entering their information in one of the available planning tools, clients can test, review, and learn more about how their financial information and assumptions affects funding their goals, using “what if” scenarios.

MyWealthSeries pages can be opened in a secondary window or framed within the adviser’s own Web site to carry through the firm’s branding, according to SunGard.

Data & Research January 19, 2010

Participants Go With the Flow in 2009

Participants who were inclined to rebalance their accounts in 2009 tended to follow the market, according to a new report.
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According to the Hewitt 401(k) index, $930 million in assets have moved from fixed-income investments to equities since the stock market rally began in April—activity that has nearly offset the transfers out of equities ($1 billion) experienced during the first quarter of the year, when the markets were down significantly.     

A Way to Go   

That said, looking back a bit further to encompass the severe market losses in 2008, Hewitt notes that equity outflows during the market declines have dramatically outpaced inflows since the rebound. Nearly 6% of total 401(k) assets ($7.3 billion) were moved out of equities into fixed-income investments between January 2008 and March 2009. By comparison, only 1% has shifted in with the rebound thus far.  

During the first quarter of 2009, nearly all equity asset classes had significant outflows, though large U.S. equity took the largest hit, with $284 million transferring out during the quarter.  International, balanced, and lifestyle funds also experienced significant outflows—each had more than $200 million shift out during Q1.  As for where that money went, GIC/stable value funds received nearly all of the transfers (gaining more than $1 billion), according to Hewitt.    

‘Turning’ Tables     

Since the markets turned in April, GIC/stable value funds have experienced the largest losses—more than $1.5 million transferred out, according to the Hewitt 401(k) Index.  Money-market funds lost $266 million in net transfers, while lifestyle funds received the largest inflows of $823 million. International funds received $539 million of inflows, followed by bond and small U.S. equity.

Cumulatively during the year, lifestyle, bond, and international asset classes all received what Hewitt described as “significant” inflows. By the end of 2009, the average allocation to lifestyle funds in the Hewitt 401(k) Index reached a record high (for that Index) of 11.1%, up 2.1% from the end of 2008 due to a variety of factors (market returns, new contributions, and participant transfers). Participant allocations to international funds also increased 1.2% to 7.3% at year-end, but still below the historical high of 10% achieved in October 2007.    

Big Losers

GIC stable value funds and company stock experienced the largest outflows during 2009. Stable value, which held 36.7% of assets in the Hewitt 401(k) Index in February of 2009, slipped to 26.6% at year-end. Company stock lost $919 million in transfers during the year, and just 14% of assets were in company stock at the end of 2009 (albeit company stock holdings in a variety of companies).

On average, 0.039% of balances transferred on a net daily basis during 2009, which is significantly lower than that of 2008 (0.056%). Further, only 19 days during 2009 had what Hewitt characterized as “above normal levels” of transfers1, about a third of the 2008 pace (51 days).     

December Movements     

Transferring participants favored equity over fixed income investments on nearly two-thirds (64%) of the days in December, continuing the trend that began in April 2009, according to the Hewitt 401(k) Index.      

Participants' total equity allocation ended the year at 58.1%, up 5.2% from the end of 2008, mainly due to strong stock market returns. However, this allocation remains significantly lower than the highs prior to the market decline (69.2% in May 2007).  Employee equity contributions increased 2.2% from 57.4% at the end of 2008 to 59.6% at the end of 2009. 

For the month of December, lifestyle/pre-mix funds proved to be the most popular destination for contributions, attracting nearly one in every four dollars (24.1%).  GIC/stable value drew 18.65% of the month’s contributions, while large U.S. equity funds garnered 15.72%.  Another big loser in 2009—company stock—pulled 12.13% of the month’s contributions, while international offerings got 8.14%, and bond funds 6.30%.  Those overall trends were mirrored in the direction of participant-only contributions for the month, with lifestyle/pre-mix, GIC/stable value, large US equity, and international leading the pack.

(1) A "normal" level of relative transfer activity is when the net daily movement of participants' balances as a percent of total 401(k) balances within the Hewitt 401(k) Index equals between 0.3 times and 1.5 times the average daily net activity of the preceding 12 months. A "high" relative transfer activity day is when the net daily movement exceeds two times the average daily net activity. A "moderate" relative transfer activity day is when the net daily movement is between 1.5 and two times the average daily net activity of the preceding 12 months.

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