Products July 15, 2021

Investment Product and Service Launches

CAPTRUST selected as investment adviser for Alegeus' HSA solution and Cabana launches new ETF suite with Exchange Traded Concepts.

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Art by Jackson Epstein

CAPTRUST Selected As Investment Adviser for Alegeus’ HSA Solution

Alegeus has selected CAPTRUST Financial Advisors as the registered investment adviser (RIA) for its modern health savings account (HSA) investment solution.

Through this partnership, CAPTRUST, which advises more than $600 billion in assets and manages more than $60 billion, will oversee the investment process and select funds to power the fully automated solution within the Alegeus HSA investment experience.

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Alegeus announced the new HSA investment solution in June at the company’s 2021 Alegeus Client Success Summit. The solution features real-time and fractional trading, a fully automated robo adviser, and a range of investment strategies to accommodate investor risk levels.

The platform also offers three distinct investing models.  

Managed models are designed for novice investors who prefer to use an automated tool to select and manage their investments on an ongoing basis in accordance with their age, risk profile and time horizon.

Self-directed models are designed for intermediate investors who have the desire to self-select from a menu of monitored investment options covering multiple asset classes to diversify their portfolios and rebalance them manually. This account type provides a balance between structure, control and time requirements.

Lastly, brokerage models are designed for expert investors who want to perform advanced research and trading across thousands of available investment instruments. This account type offers a hands-on, do-it-yourself approach to investing.

“Too often, individuals forget that HSAs can be a highly effective retirement savings tool and don’t realize the powerful benefits they can achieve by investing in these tax-efficient accounts,” says Scott Matheson, managing director, institutional group at CAPTRUST. “We are excited to bring CAPTRUST’s deep expertise and thought capital from the 401(k) industry to the HSA space. The Alegeus solution is leading-edge and goes beyond anything that currently exists in the HSA market, and we’re thrilled to bring our extensive investment management experience to help power it.” 

Cabana Launches New ETF Suite with Exchange Traded Concepts 

Cabana Asset Management, a wholly owned subsidiary of The Cabana Group LLC and a registered investment adviser (RIA) providing risk-managed investment products to investors, advisers and institutions, will expand its exchange-traded fund (ETF) lineup with the launch of the Cabana Target Leading Sector ETFs, in partnership with private label ETF adviser Exchange Traded Concepts (ETC).

The Target Leading Sector ETF suite seeks long-term growth opportunities by allocating capital to a mix of broad asset class ETFs in response to changing economic conditions. There are three ETFs in the initial suite, each geared toward a distinct investor risk tolerance, ranging from conservative to moderate to aggressive.

Like the first suite of Cabana ETFs that launched late last year, the Target Leading Sector funds are powered by the firm’s proprietary Cyclical Asset Reallocation Algorithm (CARA). CARA uses a combination of fundamental and technical data to seek to identify changes within the economic cycle and construct underlying portfolios made up of asset classes that may be deemed attractive across all market conditions. Although the Sub-Adviser (Cabana Asset Management) anticipates that it will purchase or sell securities based on the signals provided by CARA, the Sub-Adviser maintains full decisionmaking power and may override CARA.

Also similar to last year’s launch, this new fund family will come to market with an initial asset base of approximately $500 million. The new suite of Target Leading Sector ETFs includes: Cabana Target Leading Sector Conservative (ticker: CLSC); Cabana Target Leading Sector Moderate (ticker: CLSM); and Cabana Target Leading Sector Aggressive (ticker: CLSA).

All three funds are actively managed and come to market at an expense ratio of 0.69% after fee waivers.

“Different investors have different needs, which is why we’ve built these funds to incorporate varying levels of risk tolerance,” says Chadd Mason, CEO of The Cabana Group. “That combination of active management and the ability to tailor an approach based on appetite for risk is something we think investors and advisers will find very appealing.”

Cabana’s investment approaches are available to individual investors, advisers and businesses in the form of separately managed accounts (SMAs), collective investment trusts (CITs), a hedge fund, and through these ETFs.

All Cabana ETFs are used within Cabana’s premium Target Drawdown Professional Series SMAs, which are available exclusively through Cabana’s financial professionals and partner advisers.

Data and Research July 15, 2021

Workers Increasingly See Benefits of Auto-Enrollment

The majority of employees say it has gotten them on the retirement savings path at an earlier age.

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Eighty-four percent of workers who have been automatically enrolled into their workplace retirement plan say they are glad that their savings has been jump-started. In fact, they say auto-enrollment has gotten them on the retirement savings path at an earlier age than if they had made the decision on their own. This is according to Principal’s latest “Retirement Security Survey,” which is based on a poll of more than 2,000 workers and retirees, and 230 plan sponsors.

However, the survey, conducted in June, also found that only one-third of employers currently offer auto-enrollment. Among the employers that the Principal survey found using auto-enrollment in their plan designs, 21% are deferring their employees’ salary at 6%, which more retirement plan experts have been encouraging.

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The findings come as many American workers, having been vaccinated against COVID-19, have started returning to work. With that seems to have come more thought about their futures, Principal says, as the survey also found that respondents say they need to save 11.6% of their paychecks, on average, to help meet retirement goals.

Besides auto-enrollment, participants in the survey said they want to defer a high amount of their salaries, or whatever they are able to save, to help meet retirement goals. Eighty percent hope their employer will offer financial wellness programs to help them increase their financial literacy, and 60% hope these financial wellness programs will also help them improve their retirement readiness.

“We’ve known for a long time that automatic enrollment features are powerful in helping people feel more secure as they strive to build up retirement savings, but these latest survey results show we currently have a window of opportunity for access to education, as well as implementation,” says Sri Reddy, senior vice president, retirement and income solutions, Principal Financial Group. “The findings also show that when employers provide access to retirement features, such as automatic enrollment and company matching, the majority see improved savings from their employee base.”

In fact, the survey showed that 47% of workers say the company match is the No. 1 incentive toward them increasing their contribution rate.

Furthermore, besides boosting the participation rate in their defined contribution (DC) plans, employers are looking at other ways to help their workers save. For example, 32% of employers are thinking about steering workers who’ve reached the IRS maximum contribution toward an individual retirement account (IRA). Additionally, 31% of employers are considering automatically enrolling Generation Z workers (i.e., those 26 and younger) into a financial literacy education program.

Congress Considers Action on Automatic Enrollment

The results of the Principal survey come as Congress is considering legislation to incentivize auto-enrollment features in retirement plans to encourage workers to save or save at higher contribution rates. The pending retirement legislation, called the Security a Strong Retirement Act of 2021, or SECURE 2.0, would require a minimum of 3% auto-enrollment for most new 401(k) and 403(b) plans.

“This is a crucial time for employers to review their retirement plan offerings,” Reddy continues. “A tight labor market combined with new and evolving employee needs due to the pandemic make it more important than ever for plan sponsors to offer impactful retirement saving solutions. The tried and true methods of auto-enrollment, company matching and individualized financial education remain powerful assets in helping people save for their futures.”

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