Products May 5, 2016

Strategic Benefit Services Offers M&A Advisory Services

The firm says implications for retirement plans are often not fully considered in mergers and acquisitions.
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Strategic Benefit Services’ (SBS) retirement plan business expanded its offerings to include a focus on mergers and acquisitions (M&A).

With the long list of complex regulations and requirements involved in the completion of mergers and acquisitions, the implications for retirement plans are often not fully considered, the firm says. With mergers and acquisitions at a record high level in 2015, many plan fiduciaries may have put their plans at risk for failure to recognize protected benefits, service issues, or Internal Revenue Service restrictions on forgotten retirement plans.

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The SBS approach will supplement and complement existing Employee Retirement Income Security Act (ERISA) counsel or other professionals engaged in providing guidance and expertise to the new organization. SBS will add the requisite layer of due diligence to retirement plan administration that is often missing from merger and acquisition projects.

Services include:

  • Pre-Acquisition Analysis;
  • Investment Analysis; and
  • Post-Merger Transition Management.

“When mergers and acquisitions occur, retirement plan regulatory requirements and fiduciary responsibilities need to be addressed.” says James J. Kelley, president of SBS. “The goal is to provide strong support and attention to detail that may often be overlooked, as it is often the small things that lead to more significant failures.”

Strategic Benefit Services has been providing retirement services to health care, not-for-profit, and corporate organizations for more than four decades. It provides advisory services including plan design, vendor management, investment selection and monitoring, operational oversight, and onsite education and communication.
Investing May 4, 2016

Investors Reassessing Strategic Asset Allocation Models

Based on the current environment, investors’ return expectations may be more difficult to reach with traditional investment models.
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The current low-return environment means investors’ return expectations may be more difficult to achieve unless they find new investment models, according to a research report from SSGA titled “Building Bridges.”

Nearly a quarter of respondents in a survey of 400 global institutional investors said their long-term return expectations are not currently being met and many expect the underperformance to continue. Only 13% said that, on average, their asset classes were performing above expectations. Those who are experiencing underperformance said they prefer increases in active investing, objective-based investing or allocations to alternatives to grow portfolios. Twenty-two percent of respondents said they are seeking higher allocations to alternative asset classes, and 27% indicated a preference to increase their allocation to active investing. The same percentage said they sought objective-based investing. Allocations to alternative asset, active or smart beta approaches were typically funded from passive portfolios, SSGA found.

Although traditional asset allocation approaches still dominate, investors are looking for factor-based approaches such as smart beta. While 41% of respondents indicated that traditional asset class distinction remains the single most important way of approaching asset exposures, alternative classifications including factor- and objective-based are favored by 30% and 25%, respectively. Among investors wanting to address performance gaps, only 11% indicated that smart beta was the most important part of their new asset allocation approach, but 38% included it among other approaches used. SSGA also found that three-quarters of the respondents who have introduced smart beta approaches found moderate to significant improvement in portfolio performance.

Although investors are interested in finding new approaches to meet performance goals, they still face significant barriers. SSGA found that obstacles include slow peer group adoption (62%), difficulties obtaining board buy-in (46%) and a lack of in-house expertise (46%), all of which impede the transition to a factor based-strategy approach.

Building understanding as to how these strategies work and are best evaluated will be a necessary step to build confidence and adoption by investors, according to SSGA. 

The full report is available here.

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