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Editor’s Corner

Some of the most popular topics in the media recently have focused on the pursuit of goals and thrive on the stories surrounding the difficult journey toward achieving them.  The TV show, “Survivor” certainly mesmerized viewers who tuned in every week to see who would have the strength and smarts to survive the obstacles in their quest to become a millionaire. And the presidential race is certainly getting a lot of coverage and attention with a ‘gazillion’ opportunities to hear about the candidates’ campaign efforts and debate on the issues. But probably the most classic example of media interest in the struggles and hard work involved in reaching a goal has been evident in the worldwide coverage of the Olympic Games where so much time and work goes into being “the best you can be”.

The SVIA also has specific goals it is trying to achieve and the media, in particular this publication, is an excellent vehicle for presenting the progress in the journey to achieve those goals. Of course the goals of the SVIA and the Stable Value Times are not as shiny as Olympic gold, or as lofty as running the country, but the journey to achieve our goals is fortunately much less dramatic and doesn’t require eating rats to survive.  The goals are much more altruistic, as they are centered on raising awareness, understanding and respect for stable value in the marketplace and educating plan sponsors and their participants on significant developments in the broader defined contribution industry.  I think you will find that there are several interesting articles in this issue that will update you on the progress that is being made in the journey to reach our goals. 

One of the hot topics in the DC industry today is a push to make better information available to participants for their investment decisions. We have two feature articles that offer interesting commentary on developments toward this goal. First, Republican John Boehner (R-OH) discusses the bill he introduced – the Retirement Security Advice Act (H.R. 4747), which would help to “Close the Investment Advice Gap.” This bipartisan legislation passed the Employer-Employee Relations Subcommittee (EER) on a voice vote in July and we are honored to have his passionate plea for investment advice as part of our collection of articles on this important issue. An article provided by Leslie Kramerich marks a first for the SV Times – an Administration perspective on the issue of offering investment advice.  Leslie is the Acting Assistant Secretary for DOL’s Pension and Welfare Benefits Administration (PWBA) and author of the article entitled “What Employers Should Know About Investment Education and Advice”.  Leslie highlights the increasing need for investment education and advice and describes that the PWBA continues to provide suggestions for changes that would allow vendors to render advice if safeguards are in place to deal with conflicts of interest.  She wants employers to know that if appropriate standards are met, employers can offer investment education and advice without significant risk of liability.  Special thanks to our SVIA president, Gina Mitchell, for inspiring Leslie to contribute this article to SV Times.

Not only did Gina recruit others but she also wrote an article on behalf of SVIA on another important and timely topic: “Asset Allocation Models- Finding the Way”. Gina describes the SVIA’s recent efforts to get asset allocation modelers to accurately reflect stable value in their models.  She explains that this requires that they not only understand the unique features of this asset class, but importantly also understand that for some investors “it is the journey and not just the destination that matters”.  Sounds a lot like NBC’s philosophy in covering the summer Olympics.

We are also provided with an important roadmap for the path toward deriving market value performance measurement for stable value funds in Vicky Paradis’ article “the ABC’s of Measuring Stable Value Performance”.  Vicky explains the importance of having access to market value performance measurements in addition to book value returns in order to evaluate the success of stable value management.  She effectively shows us how the SVIA Task Force has proposed that the fair value of traditional GICs can be calculated, and effectively shows how it is consistent with the AIMR Performance Presentation Standards.  We look forward to continuing to move forward along this path with discussion on the presentation of performance in future publications.

Our professional journalist Randy Myers is back with another very interesting article about a new twist in retirement plan offerings. Randy describes Bank Of America’s recent offering for participants to move their 401k assets to the company’s cash balance pension plan.  Randy provides an interesting collection of views on the subject and as always provides for interesting and comprehensive reading on the topic. We also have an update on the progress being made in the area of funding agreements.  While the effort to attract interest in the sale of funding agreements recently met with some unexpected challenges, the market has experienced a modest recovery in 2000. The article takes us through what happened with a focus on the progress that has been made since.

And finally, good news to report on the state of cashflows in the stable value market.  Hueler reports that the negative cashflow trends we saw earlier in the year stabilized in the second quarter of this year.

No doubt we will continue to highlight these journeys in future editions. We welcome your input and participation toward reaching our desired goal.

Read Next: What Employers Should Know About Investment Education and Advice