Deals and People January 19, 2018

Retirement Industry People Moves

WEX Health and dailyVest form collaboration for HSA consumers, and FIA promotes consultants and analysts within the firm. 

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WEX Health and dailyVest Form Collaboration for HSA Consumers

WEX Health has selected dailyVest to further enhance the investment capabilities and user experience for WEX Health consumers utilizing health savings account (HSA) investment tools.

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The new partnership leverages dailyVest’s core investment personalization and performance calculation engine known as PIP for producing interactive, real-time investment and personal rate of return content and visualization for WEX Health’s platform. The addition of the new portal technology can provide employers and benefits administrators access to improved data analytics and customization tools that can create a more seamless, integrated experience for consumers.

According to the Devenir Research 2017 Midyear HSA Market Report, the number of HSA accounts surpassed 21 million, holding about $42.7 billion in assets, from June 2016 to June 2017. The report also states that HSA investments have seen substantial growth—with assets reaching an estimated $6.8 billion in June 2017, up 44% year over year. With HSA investing on the rise, WEX Health hopes to enhance consumer engagement within this growing space by partnering with dailyVest.

“The dailyVest platform aligns nicely with the user experience and the team brings a wealth of expertise to the table. They have the ability to present important financial information to consumers in a way that is impactful, yet easy to understand,” says Matt Dallahan, senior vice president of Strategy and Development at WEX Health. “By providing user-friendly visualizations, we can now offer an experience that appeals to both novice and experienced investors.”

FIA Promotes Consultants and Analysts Within Firm

Fiduciary Investment Advisors, LLC (FIA) has announced the following promotions within the firm.

Kevin O’Brien, has been named a partner and senior consultant of the firm. He most recently served as a senior consultant after joining FIA in 2011. O’Brien is a member of FIA’s Investment Committee and the Discretionary Investment Subcommittee. His experience includes advising institutional clients and assisting them with asset allocation, investment manager selection, and pension plan issues such as de-risking strategies and plan terminations.

Peter Nadeau, has been named a senior consultant at the firm. He most recently served as a consultant after joining FIA in 2014. Nadeau is a member of FIA’s Employee Communication and Education Committee. His focus is on defined contribution (DC) retirement plans in both the corporate and tax-exempt markets.

Scott Boulton has been named a consultant and research analyst at the firm. He most recently served as a research analyst and associate consultant after joining FIA in 2014. He is a member of the defined contribution team, advising both ERISA (Employee Retirement Income Security Act) and non-ERISA defined contribution plans. He is a member of FIA’s Employee Communication and Education Committee.

Andrea McAndrew, has been named a consultant and research analyst at the firm. She most recently served as a research analyst after joining FIA in 2015. McAndrew has over 15 years of investment experience, with a focus on alternative investments. She is a member of the CFA Institute and the Hartford CFA Society.

Dennis Scarpa, has been named a consultant and research analyst at the firm. He most recently served as a research analyst and associate consultant after joining FIA in 2013. Scarpa is a member of the defined contribution team and services clients including for-profit corporations, colleges and universities, and healthcare organizations. He is a member of the CFA Institute and the Hartford CFA Society.

Matthew Pranaitis has been named a research analyst at the firm. He most recently served as an associate research analyst after joining FIA in 2016. Matt is a member of the client-focused research group. He interned at FIA for two summers before joining the firm full-time.

Data and Research January 19, 2018

Fiduciary Questions Still Stymie In-Plan Income for Many Sponsors

Plan sponsors cite a number of reasons for being unlikely to offer an annuity-type product in the near term; top reasons include the belief that it is unnecessary or not a priority, and being uncomfortable or unclear about the fiduciary implications.

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Callan has published its 2018 DC Survey, offering up a highly detailed overview of the U.S. defined contribution (DC) plan industry.

The extensive analysis covers a broad range of topics, including the “leakage challenge” faced broadly by plan sponsors large and small.

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According to Callan’s research, most plan sponsors (79.6%) have taken steps in the recent past to prevent plan leakage, but they have met only moderate success. Some of the more common strategies observed by Callan researchers included offering partial distributions and encouraging rollovers in from other qualified plans, which tied for the most common strategies cited by plan sponsors, both at 56%.

“More than half offer installment withdrawals (50.5%),” Callan reports. “Nearly two-thirds (62.4%) anticipate taking additional steps to prevent plan leakage in 2018—most notably, more actively seeking to retain terminated/retiree assets.”

As others have reported, Callan suggests the ongoing Department of Labor (DOL) fiduciary rule reform effort—even with all its tribulation and uncertainty—is helping to shape the increased reports of plan design and investment changes. For the most part, Callan says, plan sponsors are being very conscious and cautious with respect to decisions made to manage the implications of the rule.

The analysis highlights some additional common steps that plan sponsors say they will take in 2018 to combat plan leakage. These include making the fund lineup more attractive to terminated/retired participants and allowing terminated/retired participants to continue paying off loans. Tied to the leakage challenge, Callan reports two-thirds of plans now offer a retirement income solution to employees. Of those that offer in-plan guaranteed income products, 60% are government plans, suggesting corporate America is still somewhat hesitant to turn DC plans into pension-like vehicles for retirees. 

“No plan sponsors report offering qualified longevity annuity contracts (QLACs) or longevity insurance in their plans, despite a 2014 Treasury Department ruling making it easier to do so,” Callan reports.

The research shows plan sponsors cite a number of reasons for being unlikely to offer an annuity-type product in the near term. The top reasons include the belief that it is unnecessary or not a priority and being uncomfortable or unclear about the fiduciary implications.

“Plan sponsors also cite that they are concerned about additional factors,” Callan reports. “These include a lack of participant need or demand; availability of a defined benefit [DB] plan, and annuities being too costly. One plan sponsor noted that annuities had previously been removed from the plan due to low usage.”

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