Schwab Introduces Low-Fee Passive TDF Share Class

Charles Schwab Bank launched a new share class for the passive Schwab Indexed Retirement Trust Funds (SIRT Funds), featuring a 0.08% expense ratio and a $100 million minimum investment.

Schwab says it expects the low-fee SIRT Fund share class to “have an interesting impact on the competitive landscape for target-date funds [TDFs] within 401(k) plans.” The firm suggests demand for passive investing strategies is increasing among both plan sponsors and participants, and there is especially strong demand for low-cost passive TDF strategies within 401(k)s.

The new SIRT Unit Class II provides large and mid-sized plans a fully passive solution at extraordinary value, Schwab says, contending that the funds are among the lowest priced industry-wide. For smaller plans, SIRT Unit Class I shares are available at 0.14% operating expense ratio and no minimum investment.

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The SIRT funds also have a broad asset class diversification, providing exposure to commodities, emerging markets, global real estate investment trusts (REITs), and more.

The SIRT Funds are collective trust funds that have an open architecture design, which Schwab says can address the concerns of sponsors worried about conflicts of interest with all-proprietary approaches. Schwab explains that this type of thinking has accelerated since the Department of Labor published TDF selection tips for plan fiduciaries last year, and identified potential the benefits of low-cost, open-architecture TDFs.

The new SIRT Unit Class II will be available to plans starting December 1.

Wells Fargo Established Online Income Center

Wells Fargo Advisors (WFA), the brokerage unit of Wells Fargo & Company, recently extended its Envision retirement planning process through the launch of the Income Center.

The new Income Center is a suite of digital applications that provides clients nearing or in retirement with a detailed view of their retirement income prospects. The income planning tool suite also offers the ability for investors to explore various retirement income solutions during meetings with their adviser.

WFA says generating enough lifetime income in retirement is the top issue clients want to discuss currently with financial advisers. The Income Center is designed to help clients make purposeful distributions from their portfolios.

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“Once you reach retirement age, there is an even greater need to have a deeper understanding of your retirement income plan,” says Warren Terry, managing director of financial advisory platforms for WFA. “The biggest questions come after a client knows they can retire, but may not know where their ‘retirement paycheck’ is going to come from.”

Features of the Income Center, which is intended for clients who have an Envision plan and are nearing retirement age, include an income dashboard that displays a client’s current retirement income situation, as well as strategies that can bring more income to the portfolio. The Income Center also helps investors schedule portfolio withdrawals, showing where additional income may come from in the current portfolio if there is a projected shortfall.

According to the most recent update of the WellsFargo/Gallup Investor and Retirement Optimism Index, nearly half of investors (46%) are worried about outliving their savings, including half of non-retirees and more than a third (35%) of retirees.

In addition to the Income Center, Wells Fargo Advisors also launched the Income Generation solution, a program of enhanced tools and training materials that helps advisers and clients build an individualized retirement income plan.

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