Achaean
Financial announced a strategic partnership with Envestnet, which will allow the
integration of Achaean's software into Envestnet’s wealth management platform.
“This partnership provides the
most comprehensive solution for advisers and their clients to develop the
investment strategies that meet their retirement-income needs,” said Mike
Henkel, chief executive of Achaean Solutions.
Once the investor and adviser
develop a retirement plan using Achaean’s Retirement Outcome, the results can
be added to a proposal on the Envestnet platform. Advisers can then select
appropriate investment solutions as well as annuities available on the
Envestnet platform, which are incorporated into their proposals and quarterly
reports.
While the two programs can be used together today, full integration is
scheduled for November.
More Participants Choosing Professionally Managed Investments
One-third of all 401(k) plan
participants in plans recordkept by Vanguard invested their entire
account balance in a professionally managed asset allocation and
investment option in 2011.
According to Vanguard’s How America Saves 2012
report, 24% of participants were in a single target-date fund (TDF); 6%
in a single traditional balanced fund, and 3% in a managed account
advisory program. The total number is up from 9% at the end of 2005. In
addition, in 2011, a total 18% of participants took an extreme position
in equities, holding either 100% in equities (10% of participants) or
no equities (8%), compared to 34% who did so in 2005.
Fueling
much of the growth of these programs is the soaring adoption of TDFs,
Vanguard contends. Eighty-two percent of plan sponsors offered
target-date funds in 2011, up from 28% in 2005. Forty-seven percent of
all participants use TDFs. While the growth of these funds is frequently
attributed to their designation as the default investment
in automatic enrollment plans, many participants are voluntarily
choosing TDFs. In plans with voluntary enrollment, 48% of participants
are invested in TDFs.
Vanguard
believes the surge of TDF usage will continue to influence the adoption
of professionally managed allocations. “Largely because of the growing
use of target-date options, we anticipate that 55% of all participants
and 80% of new plan entrants will be entirely invested in a
professionally-managed allocation by 2016,” said Jean Young, chief
author of How America Saves.
The
annual Vanguard report found in 2011, the plan participation rate was
76%, unchanged from 2010. Automatic plan enrollment continues to rise.
In 2011, 29% of Vanguard plans had adopted automatic enrollment, up 2
percentage points from 2010. Employees in plans with an automatic
enrollment feature at the end of 2011 had an overall participation rate
of 80% compared with a participation rate of only 60% for employees in
voluntary enrollment plans. Seven in 10 automatic enrollment plans have
implemented automatic annual deferral rate increases, up from three in
10 in 2005.
(Cont'd...)
The
average participant deferral rate rose to 7.1% and the median (the
median reflects the typical participant) was unchanged at 6%. The
aggregate average plan savings rate—including both participant and
employer contributions—was 10.4% in 2011. Vanguard’s view is that
investors should save 12% to 15% or more.
The
median account balances of continuous participants—those with an
account balance at both the end of 2010 and 2011—rose by 10%. Eight in
10 of these continuous participants saw their balances rise because of
conservative asset allocations (for example, being invested exclusively
or predominantly in fixed income holdings) and ongoing contributions. In
2011, the median participant account balance was $25,550 and the
average was $78,296.
In
2011, 18% of participants had an outstanding loan, unchanged from the
year before. Only 4% of participants took an in-service withdrawal. In
addition, participants separating from service largely preserved their
assets for retirement. During 2011, about 30% of all participants could
have taken their account as a distribution because they had separated
from service in the current year or prior years. The majority of these
participants (83%) continued to preserve their plan assets for
retirement by either remaining in their employer’s plan or rolling over
their savings to an IRA or a new employer plan. They preserved 96% of
the available assets.
With
the intensifying focus on plan fees, plan sponsors are increasingly
interested in offering a wider range of low-cost index funds, including
an “index core,” a comprehensive set of low-cost index options that span
the global capital markets. In 2011, 44% of Vanguard plans offered a
set of options providing an index core. Because large plans have adopted
this approach more quickly, slightly more than half of all Vanguard
participants were offered an index core as part of their plan’s overall
investment menu.
How America Saves
is based on an analysis of Vanguard’s full-service recordkeeping plans.
Along with looking at the overall retirement saving and investing
behavior of Vanguard’s more than three million participants, How America Saves this year includes supplemental reports on participant patterns in the DC retirement plans of 12 specific industries.