The Markets May 27, 2008

Post-Retirement Returns Critical to Retirement Income

A good portion of participants’ retirement income will come from investment returns generated by 401(k) accounts after they stop work, research from Russell Investments says.
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Authors Matt Smith, Managing Director of Retirement Services and Bob Collie, Director of Investment Strategy analyzed the make-up of retirement income of participants in a defined contribution (DC) context.

The researchers dubbed their work the 10/30/60 rule, because each dollar of retirement income will be made up of the following:

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  • 10% contributions made to the DC plan while working;
  • 30% investment returns generated before retirement;
  • 60% of investment returns generated after retirement.

Russell altered several input assumptions—such as the retirement age, the age when saving begins, and age of death—and found that only lowering the expected post-retirement return would significantly change the 10/30/60 rule.

Smith points out that the research should not undervalue the contribution level; without contributions, there can be no return. “With roughly 90% of distributions being generated by investment earnings, sound investment programs are critical if DC plans are to be effective in meeting goals for financial security in retirement,’ Smith said in the release. “This research underpins the importance of a long-term, diversified investment approach as the best way to maximize the chance of successfully meeting retirement income goals.”

Deals & People May 27, 2008

National Advisors Trust Appoints Ferguson To CEO

National Advisors Trust named Ronald G. Ferguson, formerly of Results Technology, Inc., as its new CEO.
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“The board took the initiative to look beyond current trust and banking candidates, to someone who has information systems background within the financial services sector as well as strong business development experience,’ said Chairman of the Board Joseph Kopczynski. “ We believe we already have a great trust staff. We were looking for someone who could be that bridge between fiduciary responsibilities, technology and marketing strategy.’

Before joining National Advisors Trust, Ferguson was Executive Vice President of Results Technology, a provider of managed IT services to banks and mid-market companies. Previously, he served as Executive Vice President of Euronet Worldwide and President of Euronet USA. Euronet is a global provider of secure financial transaction systems.

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“I am honored that the Board of Directors of National Advisors Trust chose me to lead the company. This is an exciting time because the company is already doing well. The Board has tasked me with leading the company to yet a higher level of growth,’ Ferguson said.

National Advisors Trust is owned by 130 independent financial advisory firms and administers over $5 billion in trust and custodial assets.


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