In Practice February 22, 2011

More Effective Practice Management Tools Needed

About half of nearly 1,300 advisers surveyed by Curian Capital surveyed feel time management and efficiency will be their biggest challenge in 2011. 
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However, while the need for practice management support is wide-spread, the majority of advisers said the tools offered to them haven’t been perfect; they either don’t have enough time to use the programs, the programs are not relevant, or the delivery of the programs is ineffective.

“Our survey reveals that advisers value tools and resources that can help support the marketing and development of their businesses, but in many cases they aren’t able to take advantage of them,” said Mark Schoenbeck, senior vice president and chief marketing officer for Curian. “Providers will need to focus on ensuring that their support programs are practical, relevant and easily accessible, so advisers can quickly and efficiently grow their businesses.”

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The survey questioned advisers in four areas. In addition to provider services and platforms, Curian looked at advisers’ economic outlook, product selection and investment strategies, and business development priorities.

The economic outlook for 2011 is nearly split down the middle: 42% believe the recession is over and 46% believe it is not.  The survey found that the recent rise in equity markets is not enough to impact clients’ risk tolerance; 88% of advisers say their clients’ risk tolerance is either lower or unchanged compared to a year ago. More than two-thirds of advisers believe inflation is a growing concern that will begin to impact portfolio construction within the next two years.

As for investment strategies, Curian found substantial differences of opinion between advisers and clients for investment strategies. Forty-three percent of advisers feel that not generating enough income to last through retirement is the biggest threat to their clients’ retirement plans, and report that 36% of their clients feel the same. Thirty-seven percent of advisers say the majority of their clients are more concerned about market volatility. However, only 16% of advisers feel the same.

Sixty-two percent of advisers said that improving efficiency and overall time management is a major goal for the coming year. Eighty-one percent said they will focus on acquiring more affluent clients in 2011 and 59% plan to market their business more aggressively.

“The findings from our latest survey bring to light two key themes – clients are still apprehensive about investment risk and their retirement preparedness, and advisers continue to struggle with managing their time and resources effectively,” said Chris Rosato, senior vice president of strategic development for Curian. “Taken together, these two points speak to the need for both a broader range of investment solutions, and a platform that can help advisers manage those solutions for multiple clients in the most efficient way possible.”

Curian distributed its “2011 Advisor Outlook Survey” to independent advisers via e-mail in November 2010; 160 firms are represented among the 1,293 respondents.

 

Products February 22, 2011

Putnam Plans Absolute Return Fund for Variable Annuities

Putnam Investments plans to launch a version of its Absolute Return 500 Fund for use by insurance companies in variable annuities and other variable insurance products.
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The Putnam Variable Trust (VT) Absolute Return 500 Fund will be available for sale only to insurers and other firms issuing variable insurance products. It is designed to seek a positive return that exceeds the rate of inflation, as reflected by Treasury bills, by 5% over a reasonable period of time (generally at least three-years or more) regardless of market conditions. The subaccount’s strategies are also generally intended to produce lower volatility than historically associated with traditional asset classes that have earned similar level of return.   

The new variable trust offering will join the Putnam 529 for America and Putnam RetirementReady (lifecycle) funds as investment vehicles that make Putnam absolute return strategies available to advisers and their clients.  

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“The Putnam VT Absolute Return 500 Fund meets a growing demand by insurers for a variable insurance counterpart to our retail Putnam Absolute Return 500 Fund that they could incorporate into their annuity and life insurance platforms,” said Putnam’s President and Chief Executive Officer Robert L. Reynolds, in the announcement. “This subaccount aims for targeted return with managed volatility that insurers can use in assembling portfolios to help meet their variable products’ investment, risk and volatility objectives.    

The trustees of the Putnam Funds have approved the proposed subaccount, and Putnam has filed the subaccount with the Securities and Exchange Commission (SEC). Subject to the required review and approval, the Putnam VT Absolute Return 500 Fund will be launched in spring 2011.   

The Putnam VT Absolute Return 500 Fund will be managed by the same team of portfolio managers and in the same manner as the retail Absolute Return 500 Fund, led by Jeffrey L. Knight, Head of Global Asset Allocation.  It will be a diversified fund with the objective of seeking a positive total return that exceeds the rate of inflation by 500 basis points over a reasonable period of time (generally at least three-years or more) regardless of market conditions.    

In order to achieve its goals, the Putnam VT Absolute Return 500 Fund will combine two independent investment strategies: a beta strategy that seeks to balance risk and provide positive total return through a comprehensively diversified, multi-asset class market portfolio with broad exposure to investment markets; and an alpha strategy with a variety of active trading tactics that employ security selection, tactical asset allocation, currency transactions and options transactions.

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