Products April 21, 2015

Integrated Platform Enables Efficient Financial Planning

An integrated platform supports advisers with a communication tool, providing them with more free time to work with clients.
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Finance Logix announces an agreement with Morningstar Inc. that integrates products from both companies, eliminating the need for advisers to manually import data in order to show clients their current financial situation and their progress toward goals.

The deal incorporates the Finance Logix platform, a customized, end-to-end financial planning and client management solution, with Morningstar OfficeSM, a research and practice management system for financial advisers. Through the integrated product, the companies’ mutual clients can access current client and account information to facilitate the financial planning process.

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Driven by innovative Web services, the integration sends up-to-date account data seamlessly to advisers, explains Tricia Rothschild, global head of adviser solutions at Morningstar. “It also supports our goal of helping advisers make their practices more efficient by connecting Morningstar products with leading third-party applications.”

The service includes data fields from Morningstar OfficeSM, such as market values, cost basis, holdings and accounts. While clients sleep, the system is at work, automatically updating the fields each night within Finance Logix. Advisers, and clients wake to a complete financial plan at their fingertips.

“One of the underlying objectives of the Finance Logix platform is to make advisers’ lives easier and to provide them with a more powerful communication tool,” says Oleg Tishkevich, CEO, Finance Logix. Additionally, because manual data entry is reduced, results include fewer errors and more efficient workflows, the companies say.

Finance Logix is a provider of financial planning and client engagement solutions. Morningstar Inc. is a provider of independent investment research. Their integrated product is now live, available to clients.

Data & Research April 21, 2015

Regs Could Impact Rollovers from Retirement Plans

Regulation could narrow the flow of rollovers from defined contribution (DC) plan assets into individual retirement accounts (IRAs), says Cerulli Associates.
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The financial crisis first sparked regulatory scrutiny and an examination of rules surrounding the sale of financial products to consumers, notes the April issue of The Cerulli Edge – U.S. Edition. The examination was mainly designed to protect retail investors and prevent shocks to the economy, says Bing Waldert, director at Cerulli. However, he says, “it also has the potential to impact the asset management industry, both in intended and unintended ways.”

Waldert describes the onset of Baby Boomer retirement—which began in 2011 as the first of that generation turned 65—as a retirement test case, unique in that it is the first generation to bear some of the responsibility for its own retirement. “This generation finds itself on the cutting edge of transition from defined benefit (DB) to defined contribution (DC) plans as the primary retirement savings mechanism,” he points out. However, only about one-quarter of investors between the ages of 55 and 70 have a retirement income plan and a specific retirement date, according to Cerulli’s data.

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In addition, the current generation nearing retirement can expect to receive Social Security, and some have access to DB plans. But the generations behind the Boomers will not find these two pillars of guaranteed retirement income as solid, and these investors may need to accept full responsibility for funding their retirement.

These factors are now causing policymakers to legislate changes intended to close some of the gaps to help vulnerable and unsophisticated investors plan their retirement, Cerulli says in its report. In many cases, the proposed solutions encourage plan participants to leave assets in an employer-sponsored plan instead of rolling them over into an IRA when they leave their employer.

“Given the dependence of the wealth and asset management industries on rollovers as a source of assets and revenues, these legislative changes present a secular risk,” Waldert says. “IRAs account for 44% of an adviser’s book of business, the largest of any component.”

Existing relationships are likelier to win rollovers, the report says, and the balances tend to be bigger. A chart in the report outlines the types of relationship, share of assets, share of rollovers and average balance size. On average, rollovers to advisers ($128,700) were more than twice the size of rollovers to direct providers ($56,300).

The April 2015 Cerulli Edge – U.S. Edition also notes:

  • New advisers entering the wealth management industry will find an additional challenge from the legislative push to keep retirement assets in the employer-sponsored system.
  • Rollovers rose to a new level of prominence in February, when President Obama took on conflicts of interest and sales inducements when assets leave DC plans.

Cerulli Associates, in Boston, is a global analytics firm that provides financial institutions with guidance in strategic positioning and new business development.

More information about The Cerulli Edge – U.S. Edition, April 2015 Issue, including how to purchase, is on Cerulli’s website.

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