The Markets May 8, 2018

Institutional Plan Returns See First Negative Quarter in Nearly Three Years

Market volatility weighed down returns, with Corporate Plans seeing a median first quarter loss of 0.78%.

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Institutional assets tracked by the Wilshire Trust Universe Comparison Service (Wilshire TUCS) saw a median return of -0.47% for all plan types in the first quarter and a median one-year gain of 9.51%.

“This quarter marked the first negative quarter since third quarter of 2015,” says Jason Schwarz, president, Wilshire Analytics and Wilshire Funds Management. “Returns for the quarter pulled the one-year return of 9.51% for the year ending March 31, 2018, down from 14.72% for the year ending December 31, 2017.”

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Wilshire TUCS first quarter returns were weighed down by losses across all major asset classes. The Wilshire 5000 Total Market Index returned -0.76% for the first quarter and 13.69% for the year ending March 31, 2018, while the MSCI AC World ex U.S. for international equities fell -1.18% in the first quarter, but gained 16.53% for the year. The Wilshire Bond Index also fell -1.82% in the first quarter, but gained 1.63% for the year.

This translated to median returns with a low of -0.95% for Corporate Funds with assets greater than $1 billion and high of 1.57% for Foundations and Endowments with assets greater than $500 million. One-year returns ran the gamut from a low median return of 6.55% for Taft Hartley Health and Welfare Funds to a median high of 12.02% for Foundations and Endowments with assets greater than $500 million.

“In first quarter, median returns for all plan types outperformed the 60/40 portfolio, which returned -1.18%,” notes Schwarz.

Among all Corporate Funds, the quarterly median return was -0.78%. Public funds returned -0.23%, while Foundations and Endowments posted a median quarterly return of -0.37%. Taft Hartley Defined Benefit Plans saw a quarterly return of -0.34%, and Taft Hartley Health and Welfare Funds saw a quarterly return of -0.25%.

Client Service May 8, 2018

Education a Top Factor in Gaining Retirement Plan Participants’ Trust

“This study shows that for financial firms who want to improve retirement savings outcomes must evolve their role from just account providers to trusted partners that people can turn to for help on holistic financial wellness,” NARPP says.

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Americans who participate in 401(k) plans are increasingly more trusting of the financial firms they rely on to manage their retirement savings, according to the National Association of Retirement Plan Participants (NARPP) 2018 Participant Trust and Engagement study, which tracks the attitudes and behaviors of 4,500 retirement plan participants from across the country,

The study reveals that trust in one’s retirement plan provider is at 30%, an all-time high, up from a low of 26% in 2016. Following the same trend, confidence has increased to 46% from a low of 35% in 2014. The study shows that higher levels of trust lead to better financial decision-making which includes higher rates of savings, increased commitment to savings, and increased loyalty to providers.

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The study revealed factors that increase participants’ trust in retirement plan providers:

  • Education satisfaction;
  • Transparent fee information;
  • Information provided is relevant;
  • Provider is viewed as a partner; and
  • The feeling that information provided is “in my best interest.”

Forty-three percent of participants are satisfied with education they are provided.

The research found retirement plan participants are confused on topics related to fees and investing basics. Fewer than half (49%) say they know how much they’re paying in fees, 19% understand investing principles, and only 17% feel the information presented to them by their provider is in their “best interest”.

The study also highlights how stressed savers are about their finances; 53% feel very or somewhat stressed about their financial situation. Employees with higher levels of financial stress have less trust in their employer, with only one in four reporting they “trust their employer to do what’s right.” Neither household income nor level of education are related to financial stress; however, debt plays a large role in it.

Saving for retirement has strong competing financial priorities such as paying off student loans and supporting other family members. Almost half of study participants (47%) report they’ve provided support to a family member in the past 12 months.

Financial wellness is top of mind. Nearly 40% of participants report they’ve taken steps in the past twelve months to reduce debt and make other financial wellness decisions.

“This study shows that for financial firms who want to improve retirement savings outcomes must evolve their role from just account providers to trusted partners that people can turn to for help on holistic financial wellness,” NARPP says.

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