Products August 22, 2017

Alegeus Looks to Enhance CDH Benefit Adoption

Considering a lack of awareness around health benefits options, Alegeus is looking to enhance employee engagement programs for employers.

Reported by

Alegeus, a firm specializing in consumer directed healthcare (CDH) solutions, is expanding its consumer engagement capabilities designed to maximize adoption and utilization of CDH benefit programs including high-deductible health plans and health savings accounts (HSAs). 

The firm is redesigning communications content and rolling out automated, targeted outreach programs. Alegeus says it is now able to offer its clients customizable blueprints for year-round, direct-to-consumer engagement designed to optimize CDH program participation and ongoing usage.

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

These expanded programs focus on foundational education, open enrollment, onboarding of new members, post-enrollment optimization and usage opportunities. “The goal of these programs is to help consumers become empowered to make better decisions and to understand the basics, such as adopting the right account; saving the right amount of money; getting a better value from their healthcare dollars; and how to take a more active role in their healthcare finances,” the firm says.

The firm argues it is also responding to a lack of awareness around health benefits. According to research by Mercer, 53% of large employers today offer HSAs, but only 23% of eligible employees adopt them. Moreover, a study by Fidelity Investments suggests that Americans lack awareness of HSA benefits, with three out of ten people surveyed saying they were unaware HSAs were not governed by a “use it or lose it policy.”

Alegeus notes that six out of 10 consumers find it challenging just to understand the differences between their benefit options. Half want guidance to answer questions, make recommendations and validate their thinking. However, most employers communicate benefits directly with employees only once a year through open enrollment.

Alegeus finds that half of employers rate their ability to articulate the value of CDH benefits as average or below, and six out of 10 rely only on paper documents and enrollment forms to educate employees. At the same time, just one-third of employers currently offer digital decision-support tools and multi-media education content, the firm says.

Steven Auerbach, Alegeus CEO, warns that “without meaningful consumer engagement to drive enrollment and optimal consumer value, our clients will not be able to fully unlock the tremendous potential of the CDH market opportunity.”

Compliance August 22, 2017

Federal Pensions Challenge Big Banks’ Securities Lending Practices

Large banks are accused by the federal pension funds of working together behind the scenes to protect their interests as middle men in the securities lending marketplace. 

Reported by

Three U.S. pension funds have filed a lawsuit against a group of the world’s biggest investment banks including Goldman Sachs, JPMorgan, Credit Suisse, UBS and Bank of America, over practices having to do with the lending of stocks.

The lawsuit alleges that the banks conspired to block competition in the securities lending marketplace through a variety of means.

Get more!  Sign up for PLANSPONSOR newsletters.

It may be helpful for readers to note that the lending of stock by major asset holders (such as large pension plans, both public and private) is typically involved in short selling and other areas of the hedge fund marketplace. Retirement systems that hold a lot of stock on long-term plays will often lend their stock out to a short seller for compensation, using one of the large banks named in the suit as a middle man.  

The arguments presented in the new litigation, submitted to the U.S. District Court for the Southern District of New York, suggest the major providers in the marketplace for securities lending have colluded and purposefully allowed the market to remain inefficient and opaque. The plaintiffs argue the providers have inappropriately worked together and structured the marketplace so that investors cannot clearly and efficiently find out who has different stock available for lending purposes and where the demand for borrowing specific stocks exists. Plaintiffs say they are also effectively prevented from being able to determine the prospective prices of these stock exchanges, given the influence of the providers named.

According to the plaintiffs, the large banks have created and fostered the opacity of the marketplace in order to prevent borrowers and lenders from working together directly and to thereby protect/maximize their own interests as a broker of securities lending arrangements. In doing this they have allegedly worked together behind the scenes to fend off previous attempts by clients and competitors to make the market more efficient. One example of how the defendants have done this, according to the complaint, was by forming a joint project called EquiLend LLC, through which the banks allegedly purchased and shelved key intellectual property of potential competition.

As is noted in the complaint, today there is approximately $1.72 trillion worth of securities on loan, and this has become a very important part of the wider financial marketplace. Simply put, there are many hedge funds that want to borrow stock and a lot of pension funds that want to loan their stock, but there is no real way for these groups to match themselves up without having to use the big banks as a conduit.

It should be noted that hedge funds often have their own interest in maintaining confidentiality, so it is far from clear that it would be as easy a matter to create more transparency in the securities lending marketplace as the plaintiffs seem to suggest. Hedge funds, many of them, will be loath to publicly broadcast their desired holdings even if they did not have to use the big banks as a go-between. 

Beyond this, the plaintiffs might also have trouble establishing the class action standing they are seeking. In the federal court system, to prove that a complaint can succeed as a class action, plaintiffs must prove numerosity, commonalty and typicality. Because these stock lending transactions are all structured and papered somewhat differently, it will be particularly challenging for the plaintiffs to prove typicality.

The full text of the complaint is here.

«