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1) AllianceBernstein’s Lifetime Income Strategy Tops $5 Billion in Assets, More than Doubling Total Assets in the Past Year

PR Newswire  |  5/18/2021

Because… The asset increase of AllianceBernstein’s Lifetime Income Strategy from $2.1 billion in 1Q20 to $5.7 billion in 1Q21 indicates the strong demand for retirement income products. A survey of 573 financial advisors by FUSE Research and WealthManagement.com published in February 2020 found that 61% of advisors said they would like to hear about more income-oriented products from fund companies. However, 91% of advisors viewed retirement income as a process rather than a product. A majority (58%) preferred to create their own retirement solutions out of single-strategy products, rather than employing an all-in-one solution offered by a fund company (42%). Therefore, it is more important for fund companies to provide support and guidance on retirement income issues than to offer specific product solutions. Fund firms should develop expertise on such areas as minimization of retirement taxes, maximization of Social Security benefits, and reduction of healthcare costs. They should also promote tools that can make retirement income planning easier.

2) T. Rowe Price Accelerates Transformation of Its Retirement Recordkeeping Business

PR Newswire  |  5/18/2021

Because… T. Rowe Price’s move to transition about 800 operations and technology associates to FIS shows the challenges recordkeepers are facing in this highly competitive industry. Prior to T. Rowe Price, Vanguard announced last July that it would outsource operations of its DC recordkeeping business to India-based Infosys. Partnerships like these demonstrate the need to use advanced technology to enhance the delivery of retirement solutions. The publicly traded T. Rowe Price had $1.5 trillion of assets as of March 2021. In the U.S. retail market, the asset manager held $790 billion of long-term mutual fund assets, with U.S. Equity accounting for 59% of the total. The asset class parted with $10.4 billion in 1Q21 and $22.7 billion throughout 2020. The firm bled $33.3 billion last year and $5.0 billion this year through March. Handing over the responsibility for managing retirement technology development and core operations to FIS will enable T. Rowe Price to focus on investment management and client services while leveraging FIS’ scale and expertise in fintech.

3) Fidelity Breaks New Ground with No-Fee Saving, Spending, and Investing Account for 13- to 17-Year Olds

Fidelity  |  5/18/2021

Because… Fidelity stated in its news release that the Youth Account is the industry’s first brokerage account designed exclusively for 13- to 17-year old teens to save, spend, and begin investing. On the one hand, the initiative can encourage Gen Z to learn financial basics and build better savings, spending, and investing habits. The hands-on experience to get involved in different aspects of their financial life at a young age can help them in the long run. On the other hand, despite parental guidance, it may be too early to expose teenagers to the volatile investment markets. There is a steep learning curve regarding educational tools and resources to perform due diligence. Plunging into stocks without proper oversight may lead to unnecessary risks, ultimately having a negative impact on their future investing behavior.