Deals & People July 7, 2015

LPL to Provide RPA Clients with Fee-Based Advice Services

LPL Financial has been selected to provide clients of Retirement Planning Analytics with fee-based investment advisory services.
Reported by

Retirement Planning Analytics (RPA) has chosen LPL Financial for support in providing clients with fee-based investment advisory services.

RPA, a newly formed retirement plan advisory and consulting firm based in Charlotte, North Carolina, serves nonprofits, such as ministries and faith-based organizations; professional groups, including organizations for doctors, lawyers and dentists; and businesses in a range of industries.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

RPA’s founder, Todd Timmerman, has entered into an agreement with Ronald Blue & Co. to transition client retirement plan assets to LPL’s platform while allowing Ronald Blue & Co. advisers to continue to act as the relationship managers for those clients. Ronald Blue & Co. reported that, as of Feb. 28, its advisers reported servicing in excess of $1 billion of client retirement plan assets.

Timmerman has more than 27 years of experience assisting with the retirement plans of major companies. He is joined by a relationship manager and plans to bring on two additional analysts.

RPA’s goal is to help organizations and their employees with the processes and solutions for working toward better retirement outcomes, Timmerman said in a statement. “I chose LPL because they stand out in the industry for the resources and industry leadership they bring to the retirement planning business,” he said. “Our clients will benefit from the wealth of resources now available to us.”

“At a time when the importance of retirement planning is gaining greater attention across the United States, and there is also increased complexity and regulation, we are able to support Todd and RPA as they help their clients work to achieve better outcomes for plan participants,” David Reich, executive vice president and head of Retirement Partners at LPL, said in a statement.

RPA is solely focused on retirement plan consulting, providing fee-based services to a wide range of organizations across the United States. RPA works with retirement plan committees to help mitigate their risks and improve decision-making as they carry out fiduciary duties. The firm also assists human resources and finance departments in implementing their organizations’ retirement plans, and helps employees and other plan participants engage in the retirement planning process in an effort to optimize their retirement outcomes.

Data & Research July 6, 2015

There May Be a Place for Alternatives in DC Plans

A typical 60/40 equities/fixed income portfolio may no longer fit the bill, OppenheimerFunds says.
Reported by

Even though the Pension Protection Act of 2006 encouraged the use of target-date funds and managed accounts, defined contribution plans may still not be properly diversified, OppenheimerFunds says in a new report, “Using Alternatives in Defined Contribution Plans.”

Because fixed income is at record low yields, the asset management firm says, “plan sponsors need additional tools to help participants cope with a more challenging market currently characterized by low rates, the potential for higher volatility and structurally lower expected returns. Alternative investments may be able to supply these additional tools to help fill the performance gap.”

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

Alternative assets include commodities, real estate or master limited partnerships, OppenheimerFunds says. Alternative strategies include market neutral, long/short equity or global macro. Private asset alternatives make up a third alternatives category, OppenheimerFunds says, and include investments in direct real estate, infrastructure, private equity and private hedge funds; however these are not liquid and in all likelihood are not appropriate for defined contribution (DC) plans, OppenheimerFunds says.

Next: The benefits of alternatives

Because plan sponsors are required to act prudently and in the best interests of participants when selecting investment choices for a retirement plan, including alternatives in the investment lineup can help the sponsor meet their fiduciary duties, OppenheimerFunds says. Alternatives can also potentially improve returns and help participants reach their retirement goals.

Diversification has become paramount, OppenheimerFunds says: “Sponsors, when selecting the investment lineup, need to consider the risks faced by participants—such as failing to accumulate sufficient savings, suffering major losses at an inopportune time in the savings lifecycle, or having inflation eviscerate a retiree’s purchasing power. In other words, sponsors should consider the breadth of potential benefits from allocating to alternatives aside from the obvious goal of improving total returns beyond what could be achieved through traditional style box exposures.”

Since 2008, assets in U.S. alternative mutual funds and exchange-traded funds have more than doubled and now represent 949 portfolios with $599 billion in assets under management, OppenheimerFunds says. Nearly three-quarters of advisers use alternatives, the firm says, and Strategic Insight predicts alternatives will grow at a 15% compound annual growth rate through 2017.

The best way for a sponsor to offer alternatives to participants, the asset management firm concludes, is not directly but through a balanced fund or a target-date fund with some exposure to them. Because defined benefit plans have used alternatives for decades, OppenheimerFunds expects “the availability of alternatives in DC plans to increase meaningfully over the next several years. Large DC plans have begun to include them in their plan lineups, and we expect continued penetration into mid-sized and smaller plans.”

The report can be downloaded here.

«