1st Quarter 2017 Capital Market Review

While capMarket Reviewital markets experienced some volatility during the first quarter of 2017, it
was significantly tamer than the tumultuous first quarter of the same time last year. The stabilization of oil prices and the consistent signs of economic stability, globally, set the backdrop for positive gains in the first quarter.

The political climate in the US, as well as the globally, seems to be the biggest driver of market expectations. Central banks around the globe have begun to take a back seat to policy makers and increasingly nationalistic agendas.

For most of the past decade, a Federal Reserve (the Fed) rate hike would have sent shivers throughout the market. However, the second raise of the past two quarters was met with largely positive reviews. The Fed can still create headlines with any discussion of unwinding their $4.5 trillion dollar balance sheet, and the fixed income markets are keenly sensitive to how the Fed will handle the roughly $1.1 trillion in debt maturing between this year and 2019.

Other central banks around the globe are not yet in the tightening mode, but they are slowing or stopping the rate of easing.

US interest rates declined throughout the quarter after a sharp post-election run up. The new gridlock in Washington (is gridlock in Washington ever new?) has started to convince markets that President Trump’s agenda will probably not be fulfilled in a short time horizon, if at all.

Fixed income markets muddled through the quarter to news’ headlines as reflected by the 0.82% gain by the BBgBarc US Agg Bond index, and the 1.76% return from the BBgBarc Global Aggregate.

Equity markets seemed to shrug off any geopolitical tensions, or central bank news, and marched higher throughout the quarter, reflected by the S&P 500 up 6.07% in the US, the MSCI EAFE up 7.25% for Europe, Asia and the Far East, and MSCI ACWI up 6.91% for the globe including emerging markets.

To learn more about how your assets are allocated, contact a Pension Consultants Investment Consultant at 800-234-9584 or email investment@pension-consultants.com.

Source: 
Index returns as of 03/31/17, Morningstar.com 
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DOL Fiduciary Rule Delayed: Future Still Remains Unclear

On April 4th, th2017_COLA_limitse Department of Labor (DOL) announced that it would be delaying the applicability date of its Conflict of

Interest Rule (also known asthe Fiduciary Rule) by 60 days. This moves the applicability date of the rule back from April 10th to June 9th.

Next, the DOL will be considering whether to leave the rule unchanged, to revise the rule, or to rescind the rule all together. It’s unclear whether this determination can be made within 60 days or whether the DOL will pursue an additional delay in the applicability date. Continue reading

The Responsibility of Plan Fiduciaries

Protecting against the Self-Interest of Others for the Good of Participants

Fiduciaries of the JP Morgan Chase 401(k) Savings Plan have recently been sued by Plan participants. Listed allegations include:

  • failing to monitor and evaluate the cost of investment options
  • imprudently allowing the Plan’s assets to remain in various proprietary (JPMorgan) investment vehicles rather than lower fee, similar investment vehicles, and
  • failing to remove fiduciaries whose performance was sub-par.[1]

Continue reading

Turbulent and Uncertain Future for the Fiduciary Rule

Turbulent Uncertain Future for Fiduciary RuleAfter more than six years of work, much anticipation, and monumental changes in the financial industry in preparation, the Department of Labor’s Conflicts of Interest Rule (also referred to as the Fiduciary Rule) is set to become applicable on April 10th, 2017.  However, it is unlikely that this fledgling rule will ever actually see the light of day.

Continue reading

Pension Consultants named a 2017 PLANSPONSOR Retirement Plan Adviser of the Year finalist

(Springfield, MO, February 28, 2017) – Pension Consultants, Inc., a leader in offering in-depth, un-conflicted advice on every aspect of retirement plan management, was recently named one of five finalists for the 2017 PLANSPONSOR Retirement Plan Adviser of the Year award. This is the second straight year Pension Consultants, Inc. has been named a finalist for Plan Adviser of the Year. PLANSPONSOR, a national publication, is the leading authority on retirement and benefits programs and is dedicated to helping employers navigate the complex world of retirement plan design and strategy. Continue reading

America Saves Week

America Saves WeekThe average American citizen has a hard time saving money. According to new studies:

  • 28% of Americans have no emergency savings[1]
  • 47% of Americans cannot afford an emergency expense of $400[2]
  • Indebted households have an average credit card balance of $16,061[3]
  • An average household pays $1,292 in credit card interest each year[4]

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Morin, et al v. Essentia Health:  A New Twist on Fee-based Cases against Plan Sponsors

Excessive Fee LawsuitA case recently filed in Minnesota took a unique approach to accusing a plan sponsor of charging participants excessive fees. Essentia Health and its subsidiary maintained two plans. One retirement plan established in 1965. The second was a 403(b) plan established in 2009. The original plan consisted of approximately 16,848 participants and $982 million in assets and was recordkept by BMO Harris. The 403(b) plan consisted of $103 million in assets and was recordkept by Lincoln Financial.[1] Continue reading

Q4 2016 Capital Markets Review

2016 Q4 Capital Market ReturnsThe 4th quarter of 2016 was another remarkable quarter. For the second time in 2016, the market was upended by an unexpected election result. In the biggest surprise since the Brexit vote, Donald Trump was elected President of the United States. The market reaction was as strong as it was unexpected. Large U.S. companies (S&P 500 index) rose 3.82% for the quarter, while small companies (Russell 2000 index) appreciated 8.83%. The bond market was equally shaken with the BBgBarc US Aggregate Bond index down -2.98% and conversely the yield on the 10-year treasury increased from 1.61% to 2.45% during the quarter. Outside the U.S. saw a different reaction with foreign developed markets (MSCI EAFE index) down -0.71% and emerging markets (MSCI EM index) down -4.16% for the quarter. Continue reading

Todd Hughes Quoted in DETROIT FREE PRESS

Todd Hughes, JD, Director, ERISA and Vendor Services, was recently quoted in a DETROIT FREE PRESS article “Would you know if you are paying too much in fees with your 401(k)?”. Todd explains how excessive fee lawsuits have increased concerns about conflicts of interest and the lack of transparency in the retirement plan management industry. Click to read the full article in the DETROIT FREE PRESS and learn more about the need for fee transparency – not only to help avoid lawsuits but to also help participants minimize extra costs.

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3 Things to Know About Using Fixed Income Indexes to Gauge Performance

Why indexes are importantRecently, we published an article on the differences in Equity Indexes. While surprising how different some of these Equity Indexes can be (and by extension the Index Funds that follow them), the Fixed Income Indexes are a completely different universe. If the Equity Index and the Index Fund do not match, there will be differences in performance.  However, this is all shades of gray compared to Fixed Income Indexes, and the funds that follow them. Continue reading