Products April 11, 2024

Product & Service Launches

Lincoln Financial Group introduces side-by-side pooled employer retirement solutions; Alger expands high-conviction growth equity lineup; Fidelity launches three actively managed liquid alternatives ETFs.

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Lincoln Financial Group Introduces Side-by-Side Pooled Employer Retirement Solutions  

Lincoln Financial Group announced the launch of FlexPEP(k) and FlexPEP(b), comprehensive pooled employer plans for 401(k) and 403(b) plans, respectively.  

With these side-by-side solutions, Lincoln aims to address the retirement benefits needs of businesses and not-for-profit organizations. These solutions add to Lincoln’s lineup of group plan solutions totaling more than $1.3 billion in assets. 

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Smart Retirement Solutions, Inc., focused on delivering independent fiduciary services, will serve as the pooled plan provider. Envestnet, a provider of technology, insights and solutions for the wealth management industry, will serve as the 3(38) investment provider, managing the investment fund menu for both solutions. 

“We’re seeing an uptick in the adoption of group plan solutions as employers look to streamline their retirement plan administration, minimize costs and enhance fiduciary protection,” Matt Condos, senior vice president, retirement plan services product solutions, Lincoln Financial Group, said in a statement. “We are committed to educating plan sponsors of all sizes about the value of PEPs.” 

 

Alger Expands High-Conviction Growth Equity Lineup  

Fred Alger Management, LLC, a privately held $25.7 billion growth equity investment manager, announced the launch of two high-conviction portfolios: Alger AI Enablers & Adopters and Alger Concentrated Equity. Both strategies are available as ETFs, mutual funds and separate accounts. 

Alger AI Enablers & Adopters, managed by Patrick Kelly, is a focused portfolio of companies involved in developing Artificial Intelligence technologies. Enablers are companies producing the building block components for and investing in AI infrastructure, such as machinery, hardware, software and services. Adopters are companies that integrate AI into their businesses to enhance their products or services or make their operations more productive. 

Alger Concentrated Equity is a focused portfolio of 20 to 30 stocks representing the highest conviction investment ideas of portfolio manager Ankur Crawford. The portfolio is sector agnostic and is considered “non-diversified,” which enables Crawford to overweight her highest conviction names without traditional mutual fund construction constraints. 

“The expansion of our investment platform through these two new strategies is the direct result of hearing from our clients looking for differentiated investment opportunities,” Christoph Hofmann, Alger’s president and chief distribution officer, said in a statement. 

 

Fidelity Launches Three Actively Managed Liquid Alternatives ETFs 

Fidelity Investments announced the launch of three actively managed liquid alternatives ETFs: Fidelity Dynamic Buffered Equity ETF, Fidelity Hedged Equity ETF and Fidelity Yield Enhanced Equity ETF.  

The options-based ETFs are listed on CBOE and available commission-free for individual investors and financial advisers through Fidelity’s online brokerage platforms, adding to Fidelity’s $14 billion alts lineup. 

“The launch of these ETFs broadens Fidelity’s liquid alts offering at a time when we’re seeing increased client demand for downside protection and enhanced income while invested in equity markets,” Bill Irving, head of Fidelity Asset Management Solutions at Fidelity Investments. “The new options-based equity strategies seek to offer risk mitigation, volatility reduction, or yield enhancement in a familiar ETF wrapper, backed by Fidelity’s legacy of active management.” 

Underlying each ETF is a common core U.S. equity strategy that seeks to outperform the S&P 500 Index. The portfolio construction aims to keep the fund’s risk characteristics similar to the benchmark’s. Each ETF combines this core equity portfolio with a distinct options-based overlay, seeking to add defensiveness or enhance yield.  

Compliance April 11, 2024

Final Fiduciary Rule Expected Soon

OIRA has canceled its final meetings on the proposal, and a final rule is considered likely for early next week.

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The Office of Information and Regulatory Affairs, a division of the Office of Management and Budget, concluded its final meetings for the retirement security proposal on Wednesday. OIRA previously had meetings scheduled to April 15, but the remaining meetings have either been canceled or rescheduled to an earlier date.

Now that OIRA has completed its review, the Department of Labor may publish a final rule in the coming days. Industry insiders expect this to happen by Wednesday of next week, but it could be as early as tomorrow.

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The final rule is likely to feature many of the core elements of the proposal: namely, applying fiduciary status under the Employee Retirement Income Security Act to annuity sales, investment menu design, and individual retirement account rollover recommendations.

One major difference that is expected, however, is for the DOL to emphasize that educational materials and conversations would not be covered by the rule. This would likely include descriptions of investments, informative tools, “hire me” conversations and conversations with human resource employees.

Lisa M. Gomez, assistant secretary for the Employee Benefits Security Administration, said on Sunday at the National Association of Plan Advisors’ 401(k) Summit that the regulator wants to draw a clear line between what is a fiduciary recommendation and what is not. Gomez also suggested that the final release would contain examples that illustrate this distinction.

Tim Hauser, the deputy assistant secretary for program operations at the DOL, also noted during a hearing for the proposal in December that the DOL has no intention of sweeping in items such as informational brochures, marketing materials, regulatory disclosures or other educational items. He said recommendations would be understood as a clear “call to action.”

Some industry sources were critical of canceling the final meetings. Though an abbreviated OIRA review is not a violation of the Administrative Procedures Act, it does add to the perception that the DOL did not take stakeholder comments very seriously. This complaint goes back to the 60-day comment period that overlapped with both Christmas and New Year’s Day, as well as a public hearing on the proposal, which was held on December 15.

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