Showing that it has some muscle in the advice arena, Standard & Poor's has entered into an advice alliance with John Hancock Funds.

The S&P product has advice, educational, and informational aspects to it, all available online.

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It also allows participants to act on the advice on the same screen as they receive it.

The expected conversion date for the service is May 1, 2000. "We have to do some customization of software. We have to build links into the recordkeeping system and build out their Web site. It takes a little more time to put all of these components together and to provide a system where participants can act on advice immediately," Jack Zwingli, executive managing director at Standard & Poor's, told InvestmentWires.

Analyses of mutual funds and stocks are provided by other units within the S&P family. Alain Michnick, regional sales manager for the firm, added that this one was of the deciding factors in S&P's favor. "The Hancock people were attracted to the breadth of the content we have," he stated.

"For me, both were simple choices," said Dale Bearden, head of retirement services at John Hancock. "Every participant wants to be told what to do, how to invest. We spent a lot of time and effort trying to educate our clients' employees. But investing is something that most people are not knowledgeable about, and it certainly is not something that they are comfortable with."

"People learn better and make better decisions when they are in their comfort zone. We thought about which name would make people most comfortable. S&P has a great tool, but what it came down to for me was the name. The combination of John Hancock and S&P makes people feel comfortable," Bearden continued.

"Another factor for us is that we are bringing advice to the mid-market and the small market, something that is relatively new. Most of our customers are in the $5-$50 million plan range. Financial Engines is priced toward larger plans. And we feel that we need to provide advice to the size of plans we serve," the official contended.

"We sell through the broker/dealer level. I do not see that advice threatening the broker/dealer. Rather, advice is an extra tool that is a part of a greater system," he concluded.

According to Hancock, two sponsors signed on for service at the vendor because of the new relationship with S&P. The firm would not disclose those names, however.

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In other advice alliance news, Manulife Financial, a 401(k) provider in the 5 to 500 participant market, has formed a partnership with mPower.

"It is more important in the small market than the large one to provide an advice offering to our clients because this is an essential product in helping participants stay in control of their retirement future," Kendall Kay, chief strategy officer, of Manulife's U.S. Group Pensions.

"We feel that advice will be as regular in 401(k) plans three years from now as having a Web site is today," he added. "And we want to be known as the company that will get participants their advice in the way they want it."

Although mPower's is currently the only advice offered through Manulife, this will change in the future. "We view advice as a continuum and mPower is only the first advice provider we are signing with. We are developing open architecture to work with other firms as well," Kay reported.

"We felt that mPower met our criteria at this time. They were a good cultural fit with us and they have speed to market. We liked their brand equity and how they have been funded. And we felt that both their educational and advice features were robust," he said.

The firm has developed a pricing model wherein sponsors can decide whether they or their participants (or a combination thereof) will pay for the service. mPower's advice will be available to both 401(k) participants as well as those in traditional pensions plans.

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Just when it seems that there just could not possibly be another advice alliance, another one rears its head. Great-West Life & Annuity Insurance of Denver, Colorado is the latest to enter into such an alliance -- in this case with Financial Engines.

For those sponsors that have selected the advice product, participants can use their credit cards to pay for the advice directly from Financial Engines. "We structured it this way to minimize our clients' liability as much as possible. Some sponsors are still very conservative about advice," Patricia Neal-Jensen, vice president of employee benefits pension sales at Great-West, told InvestmentWires.

The firms are currently in the implementation stages right now. The expected roll-out date is in March. There will be a link to Financial Engines on the Great-West Web site. "We are very active with our Web site. We are currently developing a broker site as well as we deal a lot through third parties," Neal-Jensen said.

"We have been spending a lot of time and money educating participants about 401(k) plans in general and how to invest specifically. In the end, the participants still come back to their employers or us and ask us how to invest. So, we had lengthy discussions about advice. Our clients requested advice. So about 18 months ago we issued an RFP. We chose some finalists, and we had lengthy interviews with them," Neal-Jensen explained.

"We choose Financial Engines for two reasons. First, we thought that the theoretical underpinnings of Financial Engines were superior. Second, we found the front-end appealing; the screens are user-friendly to participants. Not everyone is a PhD in Economics. Financial Engines did a superior job in explaining and guiding participants through some very complex issues," she added.

Neal-Jensen explained that the provider is talking to its clients about the new service at the moment. She noted that there is a lot of interest, and sponsors want to find out more about the new offering.

Great-West currently has a marketing alliance with New England Financial, and that firm's clients will be able to take advantage of this offering as well. Five hundred thousand total participants are involved. 

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