MSCI Inc., a provider of investment research and decision support tools, unveiled a collection of environment, social and governance (ESG) data and related quantitative analysis tools to facilitate proprietary ESG modeling and simplify portfolio footprint analysis.
The new suite of tools and data, dubbed MSCI ESG DataMetrics,
provides users with a means of driving ESG integration—or the factoring of current
and future environment, social and governance considerations—into portfolio
planning and asset allocation efforts.
Remy Briand, managing director and head of MSCI Index and
ESG research, pointed to increasing investor awareness on ESG issues, as well
as new pressures presented by a maturing market, as key reasons why advisers
and portfolio managers should consider using the new system.
DataMetrics includes 174 metrics on eight ESG
issues for all companies on the MSCI World Index. Those metrics include data on
carbon emissions, water stress, labor management, corporate governance and
various other business and geographic risk exposures.
Researchers included four
years of raw data in the new system.
Advisers can use the system to identify trends and select
ESG data that is most relevant to their clients. DataMetrics also offers more than 350
industry-specific metrics that inform the key issues of MSCI ESG Research’s
rating model, MSCI ESG IVA.
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To advisers, it’s poor money
habits. To sponsors, it’s inadequate participant engagement in the workplace
retirement plan. But the result is the same: room for improvement.
“A 360 Degree Approach to
Preparing for Retirement,” a report commissioned by Principal Financial Group, brings
together a review of all the players that affect a retirement plan and its
participants: asset managers, plan sponsors, advisers and the participants
themselves. And, according to Julia Lawler, senior vice president at The
Principal “all say the exact same thing: Participants aren’t saving enough for retirement.”
The report explores products and guidance that address gaps in the U.S. retirement
system.
A good retirement outcome
is the goal, Lawler told PLANADVISER. To achieve this, “advisers need to spend
time with plan sponsors helping them to think through strong plan design. It’s
not just picking investment options, it’s how plan design can help participants
achieve good retirement outcomes,” Lawler said.
In previous research, The
Principal has noted that plans with auto enrollment outperform those without.
Those plans that auto enroll with a 6% deferral outperform those with a lower
default. Plans that default participants into a target-date fund are more
successful in retirement outcomes than those that do not.
Lawler would like to see
more education inside the plan. Participants who engage with a financial
adviser or professional are likelier to demonstrate positive financial
behaviors, and education is the answer, Lawler said, for participants who feel
squeezed financially with competing financial needs.
Plan sponsors cannot just hope
participants will sign up or actively engage with the plan, Lawler said. “They’re
probably not likely to.” While inertia can drive participant behaviors that are
positive, such as not opting out of a plan, Lawler said plan sponsors must
continue to actively point out to participants how they are doing. “Things
change for an individual, and the need someone to show them along the way how
they are progressing,” she noted.
Products that Address Outcomes
Next, asset managers must
offer innovative products. “Outcome-based solutions are clearly what we need to
focus on,” Lawler said. The new focus is adding income features to the decumulation
phase. After making it easy for participants to get into a plan and getting
them to save more, and using diversified solutions, participants need to think
about outcomes. What will they need at retirement? What income do they hope to
achieve?
Last is getting
participants to take advantage of the plan they’ve been offered and to engage
fully.
Factors that keep plan
participants from becoming more financially secure and preparing adequately for
retirement vary, depending on who is analyzing the reasons. According to
financial advisers who participated in the survey, the following are top
constraints:
Not saving enough (74%);
Not starting to save
early enough (70%) (starting to save too late); and
Living beyond their means
(69%).
Plan sponsors answered
the same question, identifying the top constraints of plan participants as:
Not making retirement
preparedness a high priority (68%);
Inadequate education,
guidance and support at the workplace (66%); and
Lack of “retirement
readiness checkups” at the workplace (63%).
The report concludes with
best practices in plan design, education and retirement planning strategies.
“A key theme throughout
the report is how the four distinct stakeholder groups each have clear
responsibilities within the retirement value chain, whether in the form of
education, planning, product innovation or plan design,” Lawler said. “We’ve
had enough information and enough surveys. We need to take
action.”
The report is based on a
survey of 148 asset managers, plan sponsors and financial advisers with active
involvement in the 401(k) space. The respondents had combined assets under
management totaling $15 trillion. The survey was followed by 30 interviews with
a cross-section of respondents.
The full report is
available on The Principal’s website.