Labor Department Backs Off Proposed Retirement Advice Rule

The Department of Labor is dropping a rule proposed during the final days of the Bush administration that would have allowed 401(k) providers to offer advice to investors even if it involved a plan in which its own funds were sold. "We believe the final investment advice regulation published in the Jan. 21 Federal Register went too far in permitting investment advice arrangements not specifically contemplated by the statutory exemption," said Phyllis Borzi, assistant secretary of the Employee Benefits Security Administration at the DOL. "We are taking a fresh look at the regulation that was issued and are working to bring it more closely in line with the [Pension Protection Act of 2006] statutory language." Some legislators have voiced concern that the proposal would have allowed a conflict of interest for administrators that sell their own funds in 401(k) plans.

$226 Billion in Inflows Nearly Making Up For 2008's Redemptions

Open-end mutual funds have pulled in more than $226 billion through August, bringing them close to making up for ground lost in the second half of 2008, Morningstar said in a report.

For the month of August alone, investors put $54 billion into U.S. open-end mutual funds, representing the largest inflow since February 2007. "While that's certainly a positive for fund firms, it doesn't necessarily signal renewed enthusiasm for equities," said Sonya Morris, an editorial director with Morningstar. "As has been the case throughout much of the year, the vast majority of inflows have been to fixed-income funds."

Just as bond funds have benefited from investors' current decisions, so have individual funds. PIMCO Total Return, in particular, was the top-selling fund throughout 2009. The fund had its best month yet during August, taking in almost $5.5 billion in flows. It now holds a 13% share of the taxable-bond mutual fund market, and weighs in at $177.5 billion in assets. Its current size makes PIMCO Total Return almost twice as big as the next-most-popular fund, Vanguard Total Stock Market, which has $93 billion in total net assets.

Franklin Templeton has also capitalized on the recent popularity of bond funds. Its Templeton Global Bond fund reaped $1.3 billion in August, and more than $5 billion so far this year.

Putnam Launches Global Sector Funds

Putnam Investments has launched a suite of nine international sector funds that will invest in stocks in the MSCI World Index and specialize in consumer stocks, natural resources, energy, technology, financials, utilities, healthcare, telecommunications and industrials.

In conjunction with the launch of the global sector funds, Putnam has a new website devoted to the funds,

Forward Offers Tactical Growth Fund

Forward Management has launched the Forward Tactical Growth Fund, which will try to take advantage of market inefficiencies all the while minimizing downside volatility, via long, short or neutral positions on individual securities, sectors or entire markets. Broadmark Asset Management is sub-advisor to the fund, which is a 40 Act version of a similar separately managed account the two firms already offer.

The primary holdings of the fund, which can leverage holdings up to 120% net long and 100% net short, will be exchange-traded funds and futures. Its research-driven approach combines qualitative top-down analysis and quantitative risk management.

S&P Rolls Out Enhanced Fund Research Product

Standard & Poor's equity research services has upgraded its open-end mutual fund research product for financial advisers and clients. The MarketScope Advisor platform uses bottom-up research to evaluate more than 20,000 mutual funds for performance, risk and cost analysis, and ranks the funds on a scale of one to five, with five being highest.

This new approach gives the S&P the ability to analyze and rank new funds, without having to wait for a three-year performance history.

"The poor performance of many highly rated funds during the recent market downturn highlights the limitations of backward-looking analysis and indicates to us that there is significant room for improvement in the way open-end mutual funds are analyzed and ranked," said Andrea Remyn, a managing director with S&P. "We believe our new methodology provides a more dynamic and functional view of the fund marketplace."

Nearly Half of Retirees Come to Aid of Relatives

Nearly half of those Americans who have retired are helping other members of their family, either by giving them money or managing their finances directly, according to the fourth Real Life Retirement quarterly survey from Charles Schwab.

The survey found that 44% of retired individuals are supporting at least one individual financially. Children (53%) and grandchildren (37%) top the list of such dependents. An additional 12% are contributing to their parents' finances.

The telephone survey was conducted by Kelton Research between July 29 and Aug. 5. Forty-four percent of respondents said that an unsteady economy had made them more frugal in the past six months. Thirty-seven percent who had yet to retire said that because of the economy, they would be spending more conservatively during their retirement than they originally planned.

Another strategy is to work longer. According to the survey, 35% of unretired respondents plan to delay retirement, and 17% of those retired are considering returning to work, at least part time, because of the economy.

"Whether it's their children, grandchildren or their own parents, more and more retirees are finding themselves supporting family members and, simultaneously, witnessing portions of their hard-earned savings disappear," said Mark Jamison, a vice president at Schwab. "This is just the sort of retirement reality that we really encourage clients to prepare for: the unexpected."

Schwab recommends strongly that people begin to plan for their retirement, if they have not already, and realizes that helping parents comes in as "a very close second" to this important goal. To prevent a parent from being in a weak financial position, the firm suggests that people check to make sure their parents are receiving all the retirement income sources they are entitled to. If necessary, see it if makes sense for a parent to borrow against their house. Help them establish a realistic budget, and try to wisely invest whatever they do have saved, particularly with an eye to distributions and income.

As far as children are concerned, Schwab recommends that parents teach them financial independence and put them "last on your priority list financially."

Finally, Schwab recommends that people save as much as they possibly can for retirement.

Jamison said: "The economic downturn has reminded us how important it is to be financially prepared for just about any possible scenario. Adjustments can and must be made to accommodate this added financial weight in retirement. Concentrating on saving now can be the difference in achieving successful retirement."

The average pre-retiree has $219,000 saved for retirement, well below the $1.8 million they say they believe they will need to retire comfortably.

Fidelity Investments Offers Custodial Discounts

Fidelity Investments is offering a series of fee waivers and price reductions on its custodial platform for independent advisers and their customers beginning Oct. 1 that cover a wide range of services including technology, transition costs, custody and online equity trading. And rather than offer an interim, short-term discount, Fidelity says it is trying to position its platform as as one that provides long-term value through these discounts and ongoing IT upgrades.

The discounts include a 10% to 35% reduction on the annual service fees for the Oracle CRM application on Fidelity WealthCentral, as well as a 50% discount in 2010 and 2011 on the annual cost of Advent's APX-hosted multi-custodial platform.

For new accounts advisers set up with Fidelity through June 30, 2010, Fidelity is waiving annual position fees for alternative investment accounts, annual trustee fees for personal trust accounts and annual custody fees for accounts held in the managed account supermarket.

With respect to trading fees, for new accounts advisers set up with Fidelity through June 30, 2010, Fidelity is eliminating commission on electronic equity and options trades.

In addition, Fidelity formally launched WealthCentral this year, and the integrated, web-based wealth management platform is now being used by more than 200 independent advisers to house and customize such critical functions as CRM and portfolio management. Fidelity also offers the Advisor HR Solutions platform to help advisers hire, develop and retain highly productive employees.


(c) 2009 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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