Data & Research November 21, 2017

Scant Withdrawals From DC Plans in First Half of Year

The number of participants taking hardship withdrawals remained less than 1%.

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Few defined contribution (DC) plan participants took withdrawals from their plans in the first half of the year, the Investment Company Institute reports. Just 2.2% of participants took withdrawals, a mere blip from the 2.1% that did so in the first half of 2016. Only 0.9% of participants took hardship withdrawals, on par with 2016.

In the first half of the year, 16.7% of participants had an outstanding loan from their DC plan, up only slightly from the 16.6% of participants who could say the same at the end of the first half of 2016. However, this is up from 15.3% at the end of 2008 and down slightly from the 18.5% at the end of 2011.

Participants also remained committed to investing in their DC plan, with a mere 1.6% ceasing contributions, down from 1.9% in the first half of last year.

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Participants also displayed contentment with their investment choices, with only 6.8% reallocating their account balances and 4.3% directing new investments for their contributions. Account balance changes were on par with 2016 and contribution reallocations were slightly lower than in the first half of 2016, ICI says.

“The withdrawal and contribution data indicate that, essentially, all [defined contribution] DC plan participants continued to save in their retirement plans at work,” ICI says in its report, “Defined Contribution Plan Participants’ Activities, First Half 2017,” based on data from recordkeepers.
The Markets November 21, 2017

Responsible Investing Strategies Still a Challenge for Advisers

Only 21% of advisers surveyed reported feeling very well informed about responsible investing strategies, and the survey found accessing ESG data is a challenge for advisers.

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Responsible investing continues to gain traction with advisers and their clients, according to the Q4 2017 Eaton Vance Advisor Top-of-Mind Index (ATOMIX) survey of 1,000 financial advisers.

Eighty-four percent of advisers reported their clients have at least some interest in responsible investing options. However, 82% also believe responsible Investing has a long way to go before it becomes mainstream.

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One-third (33%) of advisers said they are not adequately informed about responsible investing strategies and another 38% said while somewhat informed, they are looking for further education. Only 21% reported feeling very well informed.

Accessing environmental, social and governance (ESG) data is a challenge for advisers. Sixty-nine percent said corporate sustainability data is hard for investors to obtain. Thirty-seven percent worry about achieving diversification with a responsibly invested fund.

Overall, most advisers believe responsible investing strategies perform relatively well. Seventy-two percent said responsible investing solutions pose the same or less risk as traditional strategies, while 71% said responsible investments are equally as or less volatile than traditional strategies, and 61% believe responsible investment strategies perform the same or better than traditional strategies. 

Client priorities for responsible investing continue to be environmentally focused, with clean energy (53%), sustainability (45%) and climate change (41%) emerging as the dominant reasons for selecting responsible investments.

“Clients are pursuing investment opportunities that align with their personal values,” says Anthony Eames, director of responsible investing strategy, Calvert Research and Management. “The demand for Responsible Investing strategies continues to rise, and advisors who deliver those strategies will emerge as sought-after experts in the field.”

He adds: “The lack of understanding about ESG principals prompted us to create Calvert’s Responsible Investing framework. Our investment strategies follow the Four Pillars of Responsible Investing—performance, research, engagement and impact—which empower investors to seek competitive returns and access the full capital structure with portfolios that reflect their values.”

More findings from the ATOMIX may be found here.

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