Products & Services September 7, 2023

Investment Product and Service Launches – 9/7/23

Human Interest launches Fast Track 401(k); AllianzIM introduces September buffered ETFs; Madison Investments unveils latest actively managed ETF Suite; and more.

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Human Interest Launches Fast Track 401(k)

Human Interest has launched Fast Track 401(k), a simplified way for small and medium-sized businesses to purchase and design a new 401(k) plan.

Fast Track 401(k) recommends common plan designs that comply with industry regulations like the SECURE 2.0 Act of 2022. In a 10-minute process, customers can access the same plan designs, transparent pricing and built-in investment advice, according to the firm.

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“We spent months researching the needs and challenges of first-time 401(k) buyers and learned that most grapple with anxiety and indecision when required to answer a long series of convoluted questions with little knowledge or confidence,” Kristina Wallender, Human Interest’s chief experience officer, said in a statement. “We’ve created a simplified experience that replaces 401(k) jargon with common language, guides users to commonly chosen plan options, and provides contextual guidance to help administrators make confident choices.”

AllianzIM Expands Risk Mitigation Tools With September Buffered ETFs

Allianz Investment Management LLC announced the launch of its latest series of buffered exchange-traded funds, completing the series of AllianzIM Buffered ETFs.

The September Buffered ETFs series includes two ETFs based on 12-month outcome periods: AllianzIM U.S. Large Cap Buffer10 Sep ETF and AllianzIM U.S. Large Cap Buffer20 Sep ETF. Caps on these funds will continue to be reset monthly.

“Investors have been challenged with balancing a recent string of upside economic news with what might be more realistic expectations of a cooling economy in the months ahead,” Johan Grahn, head ETF market strategist at AllianzIM, said in a statement. “Our line of Buffered ETFs offers investors the opportunity to maintain equity exposure while buffering their portfolios against unforeseen risks.”

The ETFs seek a downside buffer of 10% or 20% against market drops while allowing investors to participate in the upside potential of the SPDR S&P 500 ETF Trust up to a stated cap.

Madison Investments Unveils Latest Addition to Actively Managed ETF Suite

Madison Investments, an independently owned investment firm, announced the launch of the Madison Short Term Strategic Income ETF.

MSTI is the fourth addition to Madison’s suite of actively managed, income-driven ETFs. This expansion follows last week’s launch of the suite’s first fixed-income fund, the Madison Aggregate Bond ETF.

“Through our active management approach, our fixed income ETFs are designed to help investors capitalize on the opportunities presented by this current rising rate environment,” Mike Sanders, Madison Investments’ head of fixed income, said in a statement. “We created MSTI and its companion fund, MAGG, to address the growing need for fixed income strategies that generate yield from the bond market with a proactive approach to risk.”

MSTI is designed to generate a high level of current income by allocating to a diverse set of fixed-income sectors and individual securities within a typical duration range of three to five years. Its list of high-quality securities is built by actively managing portfolio duration, yield curve positioning, sector/industry allocation and credit quality.

Smartria Introduces Cybersecurity Focus Solution

Smartria announced the launch of its new solution, Cybersecurity Focus, built to mirror the SEC’s proposed new Cybersecurity Rule. The solution will include:

  • Cybersecurity policies and procedures templates;
  • Associated compliance workflows;
  • Cybersecurity training and phishing tests;
  • Third-party vendor due diligence;
  • Employee access to data and incident reporting and tracking; and
  • IT, device and cloud surveillance and reporting

“We developed Cybersecurity Focus to align seamlessly with forthcoming regulations,” said Mac Bartine, CEO of Smartria, in a statement. “Our ultimate goal is to empower our clients with a truly comprehensive cybersecurity solution that not only protects their clients, but also their own firms.”

YCharts Introduces Proposal Capabilities, 3 Subscription Configurations

YCharts, an investment research platform, announced the launch of Proposals, a customizable proposal offering.

Proposal can create reports of various lengths and complexities on a web-based interface. Users will be able to position investment recommendations about how a strategy meets a client’s specific needs.

“Included in select subscriptions is the new Proposal capability, designed to expedite the reporting process, equipping users with essential data, compelling talking points, and implementation functionalities that ensure compliance-approved reports are generated swiftly and seamlessly,” Caleb Eplett, chief product officer at YCharts, said in a statement.

In addition, YCharts is introducing three new subscription configurations. The flagship professional configuration provides in-depth market analysis and client-centric features, while additional configurations promote either client communication and presentation workflows or data analysis, research and market monitoring workflows.

Opto Launches Custom Funds Capabilities

Opto Investments, a private markets solution built for the wealth management community, announced new custom funds capabilities.

This enhancement enables the creation of white-label fund strategies, including private credit, equity, real estate, venture capital and infrastructure.

The new offering allows RIAs to create custom fund strategies to serve high-net-worth and ultra-high-net-worth clients. Further, through the multi-manager approach, advisers can offer diversified exposure, potentially enhancing risk management and optimizing returns.

“The rollout of Opto’s custom fund capabilities reflects our commitment to supporting advisers and giving them personalized solutions to navigate private markets effectively,” Ryan VanGorder, Opto’s CEO, said in a statement. “This new approach is set to elevate the private markets investment experience for advisors and clients alike.”

Data & Research September 7, 2023

DC Advisers: Managed Accounts Not Yet Default Threat to TDFs

A survey of retirement advisories did, however, show increased interest from plan sponsors for in-plan retirement income options.

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Defined contribution advisers are still favoring target-date solutions as the default option in retirement plans despite an industry push toward more personalized—but also more expensive—managed accounts, according to research released Wednesday by T. Rowe Price.

In the financial services firm’s third annual DC research study, those who self-identified as retirement plan advisers were more bullish on managed accounts as a concept as compared with those who identified as retirement consultants, but neither cohort was bullish on using them as the default retirement setting.

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“On the whole, neither cohort has a high conviction for using a managed account as a QDIA,” says Jessica Sclafani, a senior defined contribution strategist at T. Rowe Price.

The report, which surveyed 32 defined contribution consulting and advisory firms, found a roughly medium level of support for using dynamic or hybrid QDIAs that shift participants into a managed account and a score closer to “do not support” for implementing them as the plan default. 

The results come even as more providers are offering managed accounts as default options and hybrid options to meet the call for more personalized retirement plan advice. But Sclafani notes that managed accounts as default options are still relatively new offerings and that higher fees continue to be a concern, particularly if a participant pool does not need the added “bells and whistles.”

“We do believe that this trend will be worth watching, particularly as the DC community explores in-plan retirement income programs,” she says.

Retirement Income

The T. Rowe study did find that managed accounts were a more sought-after option for both advisers and consultants when looking at adding a retirement income option.

In that scenario, the study found that plan sponsor clients are still leaning toward more traditional, systematic withdrawal for participants to manage retirement income. That option was closely followed, however, by managed accounts with income planning features. The third-most popular offering was a target-date investment with an embedded, non-insured managed payout feature.

Overall, Sclafani and the researchers reported a shift in views on retirement income moving from an “exploratory mindset” toward in-plan retirement income solution to a “more decision-oriented posture.”

“The strategies or plan design features that received the highest scores were those that executed a paycheck like experience for participants,” Sclafani says. “Respondents were interested in solutions that helped participants take a lump sum and convert it into a stream of income into retirement.”

That stance was reflected in the fact that 24% of those surveyed said clients have no opinion of in-plan retirement income options, as compared with 59% having no opinion in 2021. Additionally, 19% of respondents said clients are offering or planning to add a retirement income solution this year, as opposed to 8% in 2021.

Similar to managed accounts, Sclafani says it is not surprising to see that systematic withdrawals—as opposed to an insurance-back income option—still leads the category. While the original 2019 Setting Every Community Up for Retirement Enhancement Act made in-plan retirement income annuities a more viable option, adding them is still a bit like “jumping into the deep end.”

“We believe retirement income will be included in a multi-year process that is iterative and will include a variety of plan design features, access to advice and potentially insured solutions,” she says.

The Inflation Factor

Retirement advisers say their clients have been responding to the recent inflationary environment when it comes to plans, according to the report. To that end, the study found that more plan sponsor clients have supported adding nontraditional bonds to retirement plan lineups to find additional growth. Among those surveyed, about three out of four expressed interest in nontraditional bonds being added to target-date lineups.

The interest in these actively managed, nontraditional, fixed-income investments, Sclafani says, was also likely in part due to traditional bond values falling, such as those tracked in the U.S. Aggregate Bond Index declining in 2022 along with equities.

“2022 was still burned into people’s brains,” Sclafani says. “With that market context, a consistent theme throughout this study was consultant and adviser focus identifying diverse [investment] activity.”

That push for diversity, however, did not lead to significant interest in alternative assets such as private equity or liquid alternatives: Only about one out of four respondents supported adding those types of investments into DC plan menus.

“Despite the recent inflationary environment, study results reveal only moderate support for adding or increasing allocations to traditional inflation-sensitive strategies in target-date portfolios,” T. Rowe researchers wrote in the report.

The report showed that fee pressure in regard to TDF offerings continues for advisers when working with clients. Many advisers noted a continued shift to offering collective investment trusts in retirement plan menus, as the DC-only investment platform can offer lower fees.

T. Rowe Price’s 2023 Defined Contribution Research Study was conducted by T. Rowe Price in partnership with the Schaus Group LLC and included 32 defined contribution consulting and advisory firms representing more than 171,000 plan sponsor clients and more than $6.7 trillion in assets under advisement, surveyed from February 14 through March 31.

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