CHICAGO, June 12, 2002 (PRIMEZONE) -- Ibbotson Associates, a leading provider of asset allocation and investment knowledge and tools, today announced that The Union Central Life Insurance Company has begun to offer `Advice by Ibbotson(TM)' as part of its Participant Retirement and Education Planning (PREP) Program. The program is an easy-to-use online advice and education system for plan sponsors and participants.
What makes this offering unique is that the advice system is housed on Union Central's (the plan provider's) Web site and is provided to plan sponsors and participants at no cost -- it is part of the comprehensive retirement plan services offered by Union Central. This advice model is compliant with ERISA guidelines because Ibbotson has a prohibited transaction exemption from the Department of Labor.
The Advice by Ibbotson service is also unique because Ibbotson constructs model portfolios and thoroughly tests each of those models; it does not rely solely on quantitative optimization software. Similar to a defined benefit plan, Ibbotson does sensitivity analysis to choose robust portfolios that stay close to the efficient frontier under various economic and investment performance scenarios. This ensures that portfolio characteristics will be stable over time.
"We developed the Advice by Ibbotson service because we recognized a need in the industry, not just for 401(k) allocation advice, but for total wealth management with flexible delivery and pricing. Our service provides retirement advice reflecting both taxable and tax-deferred account holdings," said Mike Henkel, president of Ibbotson Associates. "Our system offers the best of both worlds -- sponsors get independent, third-party advice that satisfies ERISA regulations and providers can offer a branded advice service that builds participant loyalty."
The Advice by Ibbotson advisory and personal financial planning service is fully customized by the plan provider to complement existing corporate identity. The software driving the advice uses a Monte Carlo simulation process to generate hundreds of possible economic scenarios in order to illustrate the likelihood that an individual will have enough money to meet his or her retirement needs.
A unique feature of the service is that it recommends a portfolio and a savings rate to the participant. Users can accept this advice or shape the advice by entering more personal information into the program or changing parameters to check other possible solutions. The advice service integrates an individual's planned and current savings, pension plans, cash flow, taxable assets, budgeted spending and even a spouse's 401(k) plan and then performs an investment analysis and recommends fund-specific asset allocations. The user-friendly software also makes savings and retirement planning suggestions when an individual's projected future wealth shows a shortfall.
"We understand that the purchase of a group benefit plan doesn't end with the sale. Our goal is to help participants successfully manage their wealth as it accumulates during their working years and throughout retirement," said Jerry Schmidt, vice president at Union Central. "We chose Ibbotson because they share our commitment to providing customized financial solutions that satisfy each customer's unique requirements."
About Ibbotson Associates
Founded by Professor Roger Ibbotson in 1977, Ibbotson Associates is a leading authority on asset allocation, providing products and services to help financial professionals obtain, manage and retain assets.
The company's business lines include investment consulting and research; planning and analysis software; wealth forecasting; educational services and a widely used line of NASD-reviewed presentation materials. With offices in Chicago, New York and Tokyo, Ibbotson Associates provides integrated investment knowledge, leading-edge technology, multi-conceptual education and a variety of sales presentation solutions. Ibbotson markets its integrated product line of investment analytical tools and services to institutional money managers, plan sponsors and consultants for quantitative analysis, high level decision making and presentations. The company's clients also include financial planners, brokers, mutual fund firms, private bankers and small money managers.
About Union Central
Founded in 1867 in Cincinnati, Ohio, Union Central is licensed in all 50 states and the District of Columbia and is among the 10 largest mutual life insurance companies in the nation. The company's broad product portfolio includes individual life and disability insurance, annuities, investment products, group insurance and group retirement plans such as 401(k).