Products May 5, 2009

Database Lists Millions in Unclaimed Retirement Benefits

PenChecks, Inc., said it has records of about $150 million in unclaimed retirement benefits.
Reported by

“This is for over 58,000 missing participant retirement accounts. The average account balance is about $2,600.00,” said Peter Preovolos, president and CEO of PenChecks, Inc., in a press release. Often an employee changes jobs, moves, and fails to leave a forwarding address, and their account balance or accrued benefit in a qualified retirement plan stays behind with their former employer, the company said.

PenChecks developed The National Registry of Unclaimed Retirement Benefits—a nationwide, secure database service that can match missing participants with their unclaimed retirement benefits at former employers, according to the release.

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Any organization holding retirement funds for missing participants can register online for free and create an account to add the missing participant records to the database. When one of those participants performs a free search in the database, the organization receives an automatic e-mail notification.

 

The Registry is available at www.UnclaimedRetirementBenefits.com.

 

The Markets May 5, 2009

Fund Sales Move toward Fee-Based Model

The trend toward fee-based distribution of long-term mutual funds sold through brokers and financial advisers accelerated during the financial crisis.
Reported by

A study by Strategic Insight found fee-based compensation models gained sales market share last year as fee-charging mutual fund wrap programs and fee-based registered investment advisers (RIAs) were the two fastest-growing areas of fund sales in 2008, according to a news release.

Additionally, the company said, the fund share classes tied to advice were the biggest growth areas in 2008. Altogether, those two categories of share classes accounted for a combined 62% of new fund sales via intermediaries last year among survey participants, up from 56% in 2007, Strategic Insight said. The trend toward fee-based sales was also noted in Strategic Insight’s analysis of 2007 sales last year (see “Mutual Funds Continue Shift to Fee-Based Sales’).

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Also among the findings:

  • Underscoring the changing dynamic of broker/dealer fund distribution, sales via mutual fund wrap/fee-based advisory programs increased as a percentage of total sales from 24% in 2007 to 27% in 2008. Strategic Insight said that trend was even more pronounced in 2008’s fourth quarter, as wrap/fee-based sales rose to 30% of total sales.
  • The RIA category was the only standalone channel that grew as a proportion of total sales from 2007 to 2008, with a 1.3% gain in fund sales market share. Although still relatively small (8% of total sales), the RIA channel was the fastest-growing among our survey participants for the second straight year.
  • National broker/dealers and independent/regional broker/dealers together accounted for 54% of total sales of surveyed firms in 2008. Those proportional sales were very modestly below 2007’s aggregate sales results, showing the continuing importance of those channels.

Growth of A Shares

The survey also found that the fastest-growing share classes last year were those that offered fees for advice rather than point-of-sales commissions:

Class A shares sold at NAV accounted for 60% of all A-share sales of reporting firms in 2008, and spiked to 67% during Q408. That compares to 2007, when A shares at NAV accounted for 53% of all A share sales.

Sales via no-load share classes accounted for the highest proportion of total fund sales in 2008, at 33%. Those shares also experienced the largest increase as a proportion of total sales in 2008 verse 2007, rising 3.9% (from 29% of total fund sales in 2007).

A shares sold at 4% or higher commissions accounted for just 8% of total annual sales in 2008 among fund managers primarily selling through financial advisers, down from 11% in 2007.

The study was based on a survey of virtually all the large companies that distribute primarily through financial advisers, Strategic Insight said. Survey participants managed in aggregate roughly half of industrywide U.S. open-end stock and bond fund assets as of the end of 2008.


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