Products September 28, 2023

Investment Product & Service Launches

Vanguard expand active fixed-income lineup; Brandywine announces suite of new investment strategies; RiXtrema launches AI tools for 401(k) plan; and more.

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Vanguard to Expand Active Fixed-Income Lineup With Launch of Active Bond ETFs

Vanguard announced plans to introduce two active, fixed-income exchange-traded funds—Vanguard Core Bond ETF and Vanguard Core-Plus Bond ETF—that will be managed by Vanguard’s fixed income group. Vanguard intends to launch the ETFs at the end of the year.

“These new ETFs will offer investors access to Vanguard’s world-class active investment talent at a low cost and with the convenience and flexibility offered by the ETF structure,” Dan Reyes, head of Vanguard’s portfolio review department, said in a statement.

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Vanguard Core Bond ETF and Core-Plus Bond ETF are designed to provide clients with single-fund, fixed-income holdings that are broadly diversified across a range of sectors, credit qualities and maturities.

Vanguard Core Bond ETF will offer exposure primarily to U.S. investment-grade securities with modest allocations to riskier sectors, such as U.S. high-yield corporates and emerging markets. Vanguard Core-Plus Bond ETF will be similarly constructed but will have flexibility to add greater allocations in both U.S. high-yield corporates and emerging markets.

Brandywine’s Enhanced Strategies Mitigate Sequence of Return Risk

Brandywine Asset Management announced a suite of 14 new investment strategies using Brandywine’s innovation of risk replacement, which protects investors against significant bear market losses.

Risk replacement retains the profit potential of a high-return investment such as growth stocks or the S&P 500, while replacing that risk with the lower risk of a more broadly diversified and balanced portfolio. According to the firm, the risk of 20% loss is dramatically reduced with risk replacement.

“Risk Replacement helps solve for Sequence of Return risk,” Brandywine’s founder, Michael Dever, said in a statement. “It reduces the probability of a large loss occurring near retirement.”

As a result, retirees are able to maintain larger equity exposure, providing them with more money to spend in retirement.

RiXtrema Launches Versions 2.0 of AdvisorAI and 401kAI

RiXtrema Inc., a financial planning software company, announced the launch of version 2.0 of its artificial intelligence tools, AdvisorAI and 401kAI.

The new tools will streamline how advisers work with client statements and documents. The new functionality revolves around analysis, recognition of PDFs, research, quick analysis of large portfolios or 401(k) plans. The tools will employ advanced computer vision technology and multiple language models.

The solution can deliver actionable reports to a prospect within minutes of seeing a statement. Additionally, these tools protect data privacy, a capability unique to AdvisorAI and 401kAI and new in the AI and finance industries.

“With the release of AdvisorAI 2.0 and 401kAI 2.0, advisor technology will not be the same,” Daniel Satchkov, RiXtrema’s co-founder and president, said in a statement. “Our new AI model for AdvisorAI and 401kAI is strictly gated, ensuring complete data privacy for advisers. Our model sits on a server that is completely protected. Each client’s data is siloed, and it goes nowhere else.”

NFP Introduces Totalis Program Underwriters

NFP Corp. introduced Totalis Program Underwriters, a new brand for its specialty program business.

Totalis consolidates top specialty underwriters into a single integrated platform, offering niche specialty solutions across many industries with a full suite of services, including underwriting, product development and distribution.

Totalis is led by Tom Gillingham, head of programs at NFP, and includes 17 distinct programs representing $750 million in annual gross written premium.

“We are proud to introduce the Totalis brand to enhance the momentum of our specialty program business,” said Gillingham in a statement. “The Totalis brand provides flexibility for our program businesses to operate independently from each other, while leveraging shared resources of the broader organization. With a growing collection of highly regarded businesses, Totalis is well positioned to serve the distinct needs of our distribution and carrier partners and insureds.”

Benefits September 27, 2023

Senate Committee Passes Bill Permitting Marijuana Industry Employers to Sponsor Retirement Plans

The SAFER Banking Act would permit marijuana firms to access banking and financial services, including retirement plans.

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Senate legislation that would permit employers in the cannabis industry to sponsor retirement plans passed the Senate Banking, Housing and Urban Affairs Committee on Wednesday by a vote of 14-9.

Senator Bob Menendez, R-New Jersey, was absent from the vote, but Senator Sherrod Brown, D-Ohio, voted yes by proxy on his behalf.

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The SAFER Banking Act is intended to allow cannabis firms access to federal banking and financial services, including providing employer-sponsored retirement accounts, if the business is operating legally in its state, despite marijuana being a federally banned substance. The bill next heads to the Senate floor, which has not yet scheduled a vote on it.

Paul Richman, chief government and political affairs officer at the Insured Retirement Institute, says by email that If enacted into law, “this legislation will provide the much-needed clarification for retirement plan providers and employers that eliminates the legal uncertainty in federal law to allow employers to offer a retirement plan to their employees without risking violations of the anti-money laundering laws, despite the business being legal under state law.” 

Under current law, banks risk “running afoul of provisions contained in the Bank Secrecy Act, and federal anti-money laundering laws have left many financial institutions unwilling to provide their services to this industry, including the offering of retirement savings plans as a benefit to the employees,” Richman added, in a statement. 

While most of the nine senators who voted against the bill were Republicans, some Republicans, such as Senator Cynthia Lummis, R-Wyoming, voted to advance the legislation. She argued that although she does not favor marijuana legalization in Wyoming, the bordering states of Colorado and Montana should not have their businesses discriminated against by being unable to access banking.

Senator Steve Daines, R-Montana, who also opposes legalizing marijuana, said the act should be passed because of the risk an all-cash business puts on marijuana firms. “An all-cash model makes them targets for theft, tax evasion and organized crime,” said Daines, who also voted to advance the legislation.

Representative Patrick McHenry, R-North Carolina, ]chair of the House Committee on Financial Services, said in December that he opposed the SAFER Banking Act but would not oppose it if the party as a whole wanted it passed, according to reporting from The Hill.

Even if most Republicans oppose the legislation, the party’s nine-seat majority in the House might not be enough to block it if some House Republicans vote for it, as some Senate Republicans have already done.

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