Products October 17, 2019

Investment Product and Service Launches

FIDx and Transamerica partner to provide annuities; Fidelity adds customized models to AMP solution; J.P Morgan improves TDF analysis tool; and more.

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Art by Jackson Epstein

Art by Jackson Epstein

FIDx and Transamerica Partner to Provide Annuities

FIDx has formed an alliance with Transamerica to provide annuities to investors and join the Insurance Exchange (Ix) platform. Acting as a bridge between insurance carriers and wealth management platforms, FIDx provides Transamerica access to a pool of advisers who previously could not integrate annuities alongside investment portfolios, further helping them to address the financial planning needs of their clients.

“We are excited to welcome Transamerica to join the FIDx platform,” says Dan MacKinnon, CEO of FIDx. “We are dedicated to continuing to expand our offerings and integrate with the top insurance carriers in the industry in order to ensure advisers have a variety of applicable annuity products for their clients to better meet their individual needs.”   

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FIDx officially launched the Ix in June . As a product-agnostic exchange, the company acts as the middleman, seamlessly connecting advisers to leading insurance carriers and annuity products. Founded by industry problem solvers, FIDx puts annuity sales on par with mutual funds, exchange-traded funds (ETFs), and separately managed accounts. FIDx is also the first annuity products platform provider supporting Envestnet’s Insurance Exchange.

“As we continue to onboard additional carriers, advisers participating in the Envestnet Insurance Exchange will benefit from expanded annuity offerings for their clients,” says John Yackel, head of Strategic Initiatives at Envestnet and strategic FIDx partner. “Envestnet will continue to add new carriers as part of our mission to build a fully integrated financial wellness network.”

Fidelity Adds Customized Models to AMP Solution

Fidelity Clearing & Custody Solutions has added customized investment models to Fidelity Automated Managed Platform (AMP), its digital advice solution.

The update gives advisers the ability to customize portfolios in Fidelity AMP by creating models based on end-investors’ risk tolerance and other factors. Advisers can build curated models using a wide range of funds from across the industry, as well as define the asset allocations, resulting in a customized experience for clients.

“Digital advice solutions help advisers meet investors’ varied, evolving needs, and Fidelity AMP hits the balance of digital and human elements that advisers have said they’re looking for—allowing them to collaborate with investors on financial planning and evolve alongside those clients,” says Gary Gallagher, head of Investment and Managed Solutions, Fidelity Institutional. “Fidelity AMP helps advisers focus on higher value conversations with investors, effectively leverage digital advice to serve more clients and scale their businesses, and efficiently offer personalized experiences—even more so now with custom investment models.”

With Fidelity AMP, firms and advisers can customize and integrate with their existing offerings, including white-labeling the end-investor portal with their branding. Co-developed by Fidelity and eMoney Advisor, Fidelity AMP was purpose-built based on conversations with advisers about how the digital advice solution could best meet their needs and help them deliver maximum value to investors. The Fidelity AMP now features enhanced education and guidance in the end-investor portal and deeper data integrations.

Fidelity offers two different deployment options for Fidelity AMP: a call-center/enterprise model, where all accounts are assigned to a home office representative, and an adviser model, which enables a firm’s advisers to open Fidelity AMP accounts with their individual branding.

J.P Morgan Improves TDF Analysis Tool

J.P. Morgan Asset Management has enhanced its Target Date Compass, the target-date fund (TDF) analysis tool used by advisers to help plan sponsors evaluate and select funds with greater knowledge and confidence.

The enhanced Target Date Compass delivers new search capabilities that allow advisers to more quickly find the funds that align to plan sponsor goals, while new filters enable them to easily narrow down the target-date universe. The upgraded tool is powered by third-party Morningstar data.

“Since Target Date Compass was launched in 2008, the program has been a standard bearer for target-date fund evaluation. Over the past decade we have continued to work in consultation with our clients to evolve the tool. The latest iteration provides advisers with the capability to assess target-date funds more quickly, easily and accurately,” says Michael Miller, head of Retirement Distribution at J.P. Morgan Asset Management.

The new Target Date Compass offers a suite of new search filters resulting from extensive user testing with advisers. These include fund types, minimum track records, Morningstar analyst rating, equity exposure, diversification, and more.

Nuveen Presents CIT TDF Series

Nuveen has increased its target-date fund (TDF) solutions offering with the introduction of the Nuveen TIAA Lifecycle Blend CIT series. The new collective investment trusts (CITs) will be managed by Nuveen’s mixed assets portfolio management team.

The Nuveen TIAA Lifecycle Blend CIT series consists of 12 funds, including 11 target-date funds (TDFs) at five-year intervals for retirement dates 2010 through 2060 and a retirement income fund for those already in retirement.

The trustee for the new CITs is SEI Trust Company, wholly owned subsidiary of SEI Investments Company, a global provider of institutional and private client wealth management solutions. SEI maintains ultimate fiduciary authority over the management of and the investments made in the CITs, with Nuveen as adviser.

“Collective investment trusts offer an attractive investment framework for plan sponsors and their advisers and consultants who are focused on cost-effective investment solutions,” says Jeff Eng, managing director and head of retirement products at Nuveen. “This new blended target date fund CIT series helps meet a growing demand in the 401(k)-market space.”

The Nuveen TIAA Lifecycle Blend CIT series contains a blend of active and passive holdings. The series aims to appeal to plan sponsors seeking expertise and experience in actively managed funds while seeking to balance investment costs by using index funds where appropriate.

“We’re excited to partner with SEI to offer a blended CIT series with direct real estate investments,” says Brendan McCarthy, defined contribution investment only (DCIO) national sales director at Nuveen. “With the addition of an active passive mix of underlying investments designed to help meet the needs of today’s corporate retirement plan market, we expect the response from plan sponsors and their advisers to be very positive.”

Fidelity Promotes New Bond Index Fund

Fidelity Investments has launched Fidelity International Bond Index Fund (FBIIX).

Fidelity International Bond Index Fund’s total net expense ratio is 0.06%, and is available, with no investment minimum, to individual investors, as well as through third-party financial advisers and workplace retirement plans.

The fund will normally invest at least 80% of its assets in securities included in the Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Diversified Index (USD Hedged), which is a multicurrency benchmark that includes fixed-rate treasury, government-related, corporate and securitized bonds from developed and emerging markets issuers while excluding U.S. dollar-denominated debt. The fund’s foreign currency exposures will be hedged by utilizing forward foreign currency exchange contracts.

“While historically known for our active management expertise, Fidelity has arguably built one of the best index fund franchises in the industry, backed by exceptionally low costs and world-class customer service,” says Colby Penzone, head of Investment Product. “Whether it’s index funds, actively managed funds or separately managed accounts, we’re focused on providing individual investors, workplace retirement plan sponsors and participants, and financial advisers with extensive choice and exceptional value, elements that we believe are unmatched in the industry.”

Compliance October 17, 2019

EBSA Reorganization May Bring Positive Changes

Industry sources speculate that the DOL's new structure for its Employee Benefits Security Administration will result in more guidance and fairer enforcement.

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Senator Patty Murray, D-Washington, ranking member of the Senate Committee on Health, Education, Labor and Pensions (HELP), seems up-in-arms about the reorganization of the Department of Labor’s Employee Benefits Security Administration (EBSA) that went into effect October 1.

Prior to the reorganization, she sent a letter to Assistant Secretary Preston Rutledge asking him to hold off on the shuffle and requesting answers to more than a dozen questions, as well as documentation of an implementation plan. When the reorganization went into effect, she followed up with a letter saying the agency’s response was “woefully inadequate and unresponsive.” She also stated, “The lack of an adequate response … deepens my concern around the impact it could have on the workers, retirees, and families who turn to EBSA for help with the benefits they rely on.”

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So what’s the big deal?

First of all, according to Michael Kreps, attorney with Groom Law Group in Washington, D.C., as ranking member of the HELP committee, which oversees the DOL, Murray takes that oversight seriously and has “an instinctual interest” in having a better understanding of how the DOL, and particularly the EBSA, operates. “It’s pretty common for folks in senior positions in Congress to inquire about major developments in agencies they oversee,” he says. He points out that lawmakers did the same thing when the Wage and Hour division reorganized in August.

The proposed reorganization appears to be a meaningful structural change from the status quo, shifting some authorities to EBSA’s politically appointed deputy and creating a new director position to oversee regional offices.

Rutledge, a political appointee, oversees the EBSA. Previously, Timothy D. Hauser, a career EBSA staff member was over all operations—national and regional; however, the reorganization has split his position, making him Deputy Assistant Secretary for National Office Operations and naming Amy J. Turner the Deputy Assistant Secretary for Regional Office Operations, another career position.

Kreps explains that the reorganization has also revised the reporting structure so some policy-heavy offices report to Principal Deputy Assistant Secretary Jeanne Klinefelter Wilson, a political appointee.

From conversations in the industry, Hauser has a reputation for being very supportive of a more employee-favorable agenda, although he is seen as a balanced person. So, it could be that Murray is concerned that political people are asserting themselves and trying to limit the extent of Hauser’s role—which could be problematic for people opposed to the current administration. The national office is more employer friendly, so some may see the reorganization as trying to reign in those from field offices that may be giving employers a hard time.

However, from conversations and news reports, that is not how the majority view it.

A positive change

According to Kreps, it appears at the EBSA that a lot of policy issues are run through the second most senior person at the agency. Previously, that was Hauser, but now it is Wilson, a political official. He says there is a justification that when the EBSA makes a policy decision, it should be made by part of the political structure in the administration. “The reorganization seems more about aligning policy decisions and running them all through central political officials,” Kreps says.

He notes that the DOL has historically issued a lot of sub-regulatory guidance—for example, advisory opinions to explain its views. But, Kreps says, starting in the Obama administration and flowing into the Trump administration there has been a shift from sub-regulatory guidance to focusing on large regulatory projects—the fiduciary rule under Obama, and association retirement plans under Trump. “There have been some public statements by DOL officials that they would like to help the industry by issuing more guidance and opening up a process that has been dormant for a while.”

As for the new structure to have someone higher up coordinate the field offices—coordinate the regional offices at a national level—Kreps says it seems important that the EBSA wants to offer consistency. “The EBSA wants to treat similarly situated stakeholders in the same way and make sure the benefits community has rules of the road that are the same for all,” he says. “It also helps the national office have a better sense of what is going on in the field and better process information that is coming in.”

The retirement plan community may see more fairness, as well as guidance, from the reorganization.

“We have a group that works a lot with the EBSA and they deal with some of the most important issues out there, so we are hopeful that [the agency will] be able to engage with the broader community to make positive changes going forward both on the participant and plan sponsor/provider side,” Kreps concludes.

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