Investing September 28, 2004

SDBA Asset Allocation Levels Stagnant in 2nd Quarter

September 28, 2004 (PLANSPONSOR.com) - Exposure to fixed income and mutual funds in self-direct brokerage accounts (SDBA) remained static in the second quarter of 2004, the first such leveling off in a year.
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Overall asset allocation remained neutral in the second quarter of 2004; however, 44% of asset flows in the second quarter were accounted for by mutual funds, down from 62% in the previous quarter. Equity-asset flows moved upward from a first-quarter reading of 33% to 39% in the second quarter. 

Schwab representatives attributed this leveling off in part because of election year uncertainty, as well as geo-political turmoil. “In an election year, it’s understandable that investors are cautious,” said Mark Coffrini, Schwab Corporate Services vice president, in a press release.  “But by mid-year we usually see a return to normal activity and the slowdown in the second-quarter indicates that investors are staying on the sidelines and waiting for geo-political issues to shake out and for the presidential election to be over.”

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The survey also quantified the trading patterns of different generations. As a whole, older people – those over 50 – held a higher level of mutual funds and less cash then younger people. Fixed-income asset holdings also increase with age. Those over 50 allocated an average of 8% of their portfolio to fixed-income instruments, whereas only 1% of assets are in these vehicles for those aged 20 to 39.

Trading also increases with age, with those over 50 making an average of four trades per quarter. Those aged 40 to 49 trade only 3.4 times on average over the same time-frame.

Schwab’s SDBA Indicators reports profile the investment behavior in 60,000 401(k) plans directing trades through the company’s self-directed brokerage accounts. A complete copy of the survey can be accessed at  http://scs.schwab.com/retirement_plan_services/sdba_indicators.html .

Benefits September 27, 2004

Overtime Eligible Workers on the Rise

September 27, 2004 (PLANSPONSOR.com) - Almost 50% of large companies have increased or will boost the number of employees getting overtime under the new federal wage-hour regulations, a survey found.
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The HR Policy Association survey found that nearly all employers (98%) have initiated compliance with the new regulations issued under the Fair Labor Standards Act (FLSA). Among those companies, 48% said that they would treat more employees as eligible for overtime, while 49% said that there would be little or no change and no companies reported that they would treat fewer employees as eligible for overtime, a news release said.

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“Our members are baffled by those who claim that millions of workers will be denied overtime because of the change in the rules,” said HR Policy Association President Jeffrey McGuiness, in the press release. “The survey confirms what we have been hearing anecdotally for some time now, that more employees will start receiving overtime, not less, and that the rest will experience little or no change in the way they are treated,” he said.

More than 100 companies employing more than 6 million workers participated in the survey, which was conducted September 15 to 22.The association represents senior human resource executives of Fortune 500 companies.

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