Products October 8, 2015

Investment Product and Services Launches for the Week

New institutional share classes were announced this week by T. Rowe Price, while Merrill Lynch unveiled apps that help retirement savers address longevity and inflation risks.
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T. Rowe Price Adds Retirement “I Class” Shares

T. Rowe Price launched its new Retirement I Funds, a series of target-date funds (TDFs) for retirement plans and other institutional investors.

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The 13 new Retirement I Funds “have identical investment strategies to those of the firm’s flagship Retirement Fund series,” but are differentiated by lower shareholder servicing costs. The funds’ glide paths, underlying funds and targeted asset allocation are the same.

George Riedel, head of T. Rowe Price’s financial institutions business, says the launch of the new fund series is “a natural extension of our ongoing effort to meet the investment needs of our institutional and retirement clients.”

Financial intermediaries, retirement plans, other institutional investors, and individuals investing a minimum of $1 million can use Retirement I Fund series as a low-cost share class option. The Retirement I Fund series add to the 19 I Class offerings T. Rowe Price launched in September 2015.

NEXT: Merrill Lynch Expands Participant Support

Inflation and Longevity Education from Merrill Lynch

Merrill Lynch is introducing two new iPad applications that “help further illustrate the important risks individuals may face in retirement.”

The first app, “Longevity Discovery,” helps individuals explore the implications of longer life expectancy. According to Merrill Lynch, the app “can help clients begin to think about what a longer life expectancy in retirement means for them. The app allows clients to interactively explore possible opportunities, such as embarking on a second career, and challenges, such as covering long-term care costs.”

The second app is known as “Inflation Discovery” and takes a similar approach to educating retirement savers. The app “delves into the opportunities and challenges of inflation … and can help clients understand how inflation may impact their retirement by illustrating how it can erode purchasing power over time. For example, a consistent 2.5% inflation per year over 30 years would reduce their purchasing power by 52%, assuming no additional factors.”

Compliance October 8, 2015

Lawmakers Want a Review of Fiduciary Rule Changes

In a letter to the DOL, members of Congress ask that changes made to the proposed fiduciary rule be submitted for review to the public before sending to OMB.
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Members of the U.S. House of Representatives have sent a letter to Secretary of Labor Thomas Perez expressing concerns over the Department of Labor’s (DOL) proposed regulation to expand the definition of fiduciary investment advice under the Employee Retirement Income Security Act (ERISA).

Led by Representatives Mike Kelly (R-Pennsylvania) and Sam Johnson (R-Texas), the lawmakers urge the DOL to make “substantial changes to address the shortcomings of the proposed rule…” They also ask that the DOL “provide stakeholders with an opportunity to review the changes before the rule advances and is submitted to the Office of Management and Budget.”

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“Any regulation to expand the definition of investment advice should enhance retirement security by increasing access to retirement savings and improving income security during retirement while also preserving investor choice and improving access to financial guidance and education,” the letter states. The lawmakers contend that the current proposal does not meet these goals.

While they say they support the creation of a best interest standard for investment advice, the members of Congress note they have “serious reservations” that the proposal will severely disrupt the availability of affordable financial education and investment advice and restrict product choice and retirement security for many Americans.

The letter asks for a written response from Perez within 15 days.

The DOL has received more than 3,000 comments about its proposal, with many commenters expressing that it would do more harm than good, especially for savers with low retirement account balances.

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