Products August 20, 2013

Bank of America Launches ESG Support Program

August 20, 2013 (PLANSPONSOR.com) - Bank of America’s investment businesses launched a program that supports clients’ needs to align investments with the environmental, social and governance (ESG) issues.
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Together, Merrill Lynch Wealth Management and U.S. Trust now offer more than 180 ESG-themed investments to individual and institutional investors, including mutual funds, exchange traded funds, separately managed accounts, and alternative investments. These offerings are organized around three key themes:

  • Environmental Stewardship – examining use of water, alternative energy, climate change and clean tech;
  • Human Capital Practices – including “gender lens” investing (investments focused on improving the lives of women and girls) and faith-based investing; and
  • Corporate Governance – focusing on corporate transparency, disclosure, reporting and incentives.

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In early 2013, U.S. Trust launched a proprietary strategy called Environmental Stewardship and Sustainability (E2S) with Jason Baron, portfolio manager. This strategy identifies thoughtful stewards of the environment by assessing energy practices, carbon footprint reduction, and process efficiency.

“In creating this strategy, we responded directly to client demand,” said Chris Hyzy, U.S. Trust’s chief investment officer. “We believe that corporations dealing effectively with environmental issues are poised to do well relative to their industry peers.”

That followed the launch of “Socially Innovative Investing” (S2I), also managed by Baron. S2I is a proprietary, customizable strategy that allows U.S. Trust and Merrill Lynch Wealth Management clients to deploy a proprietary set of positive investing screens. As of March 2013, the strategy had grown to approximately $600 million in assets.

For Merrill Edge clients, a new landing page now houses all ESG-related products and services. For self-directed clients who like making their own investment decisions, Merrill Edge identifies socially responsible investing (SRI) options in its mutual fund and ETF screens.

In addition, Merrill Lynch Wealth Management now offers an SRI proxy voting service, at no additional charge, for clients with certain types of accounts. By completing a simple form, these clients can delegate proxy voting authority to a service provider who will vote proxies on their behalf, following SRI Guidelines. SRI Guidelines reflect a broad consensus of the socially conscious investing community and help to assess environmental, social and governance risks.

To build these and other ESG solutions, Bank of America taps into the thought leadership of its ESG Council, created in 2012 and comprised of a broad range of experts and leaders throughout the organization. The council includes Sarbjit Nahal, BofA Merrill Lynch Global Research’s director of Thematic Investing, who has led the industry’s No. 1 ESG team for the third year in a row, as ranked by Institutional Investor magazine. His team recently published papers on a wide range of related megatrends, including water, obesity, safety, extreme weather, and energy efficiency, and has also developed ESG screening tools on CO2, geographic risk and the ESG Consensus.

More information is at http://www.merrilledge.com/socially-responsible-investing.

Benefits August 20, 2013

Employees Need HSA Education

August 20, 2013 (PLANSPONSOR.com) - Americans who hold the responsibility for making household health benefits decisions are uncertain about health savings accounts’ (HSAs) features.
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Two-thirds (65%) of respondents in a survey by Fidelity Investments said they do not understand how an HSA works. Confusion between an HSA and a health flexible spending account (FSA) is prevalent. Seventy-three percent of respondents said an HSA is pretty much the same thing as a health FSA or were unsure, and the “use it or lose it” provision of FSAs was one of the most commonly misunderstood differences between the account types.

Health FSAs require that all annual contributions be spent by the end of the year on eligible out of pocket health care expenses. Remaining FSA balances are forfeited. Unlike a health FSA, HSA balances carry over from year to year allowing account holders to accumulate their savings for qualified health care needs in retirement, as well flexibility with their spending. However, 69% of all respondents incorrectly felt they would lose unspent money in an HSA at the end of the year.

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“It’s clear more can be done to educate employees on the numerous benefits of HSAs, from saving for current and long-term qualified medical expenses to factoring health care costs into retirement planning,” said William Applegate, vice president, Fidelity Investments. “Employers that offer HSAs should deliver employees easy-to-understand communications and intuitive decision support tools, along with onsite and online workshops that clearly explain how HSAs work and how employees can benefit.”

Nearly two-thirds (65%) of respondents who enrolled in their company’s HSA-eligible health plan and opened an HSA said they received the right amount of employer communication to help them make the decision. Of these respondents, the most influential source that helped guide their decision was their employer or spouse’s employer. Contrasting these findings, of those respondents offered the option but declining it, only 9% said their employer influenced that decision, and 55% spent less than a half hour researching their health care benefits options.

Of respondents who chose their employer’s HSA-eligible health plan and opened an HSA, financial considerations were top factors in their decision to do so. When asked the reasons behind their choice, 48% of respondents cited how HSAs allow account holders to carry over remaining funds year to year, 45% said lower premiums, 38% said the tax savings, and 25% said an HSA is an attractive savings vehicle for their anticipated health care expenses in retirement.

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