Study Demonstrates Value of John Hancock Asset Allocation Portfolios for 401(k) Plan Participants

BOSTON, May 8, 2014 /PRNewswire/ -- Participants in qualified plans serviced by John Hancock Retirement Plan Services (RPS) who invested exclusively in a single John Hancock asset allocation portfolio earned better returns on average than participants who selected individual investment options to form their portfolios over the five, ten, and fifteen year periods ending December 31, 2012.¹ This is according to a commissioned study of John Hancock USA recordkeeping clients conducted by Burgess Management & Research Inc. 

The recent study revealed a number of outcomes, including that the average annual return earned by participants invested in John Hancock Lifestyle portfolios has exceeded the average annual return earned by those invested in non-asset allocation investment options by 106 bps (1.06%) over 15 years. Results like this help show the benefits of diversification in a single choice and why it may be important to give participants more opportunity for what the company calls "investing smart."

"Saving early, saving more and investing smart is the golden rule for long term investing and asset allocation options could be a great example of investing smart for a participant," said Andrew Ross, senior vice president of Marketing and Product Development, John Hancock RPS.

Better Returns, When Every Dollar Counts

Investing smart and achieving better returns could be even more of a benefit for those participants whose 401(k) balance is important, such as people with a low balance and nearing or in retirement. The 5- year study found that participants with low balances whose assets were invested in Lifestyle investment options earned higher returns, with improved spreads varying by age from 184bps to 320bps (1.84% to 3.20%). The oldest participants, 60 years and older, earned the largest spread.

"We believe that outcomes matter, choice is important and that to retire comfortably, it's not enough to just get in the plan. We help more participants get into diversified portfolios with over 78 percent of our 1.7 million participants invested in an asset allocation option," said Ross.² "This study is about real results earned by real participants and demonstrates the effectiveness of these portfolios in retirement plans across all risk categories and age groups." 

Participants in John Hancock Asset Allocation Funds Benefited from Holding More Diversified Portfolios

 The study found that participants in John Hancock asset allocation investment options, those in Lifestyle investment options in particular, earned better returns because the majority of them adopted and adhered to asset allocations that were more diversified than those implicitly adopted by non-asset allocation participants, who tended to select investment options that resulted in asset allocations that fell at the extremes of the risk spectrum, aggressive or conservative.  "Just looking at the past five years, the impacts of investment selections by participants became clear when comparing the returns of Lifestyle participants and non-asset allocation participants. About 75 percent of non-asset allocation participants invested aggressively or conservatively, and these were the risk segments where they earned some of the lowest returns," said Ross in review of the study.  

 Asset Allocation Helped Investors Stay the Course

 The study found that participants who significantly altered their asset allocations, defined as change in the allocation to equities of more than +/- 25 percentage points, earned substantially lower returns. In the recent five-year period, participants who maintained their entire portfolio in a Lifestyle Fund earned a return of 3.45 percent on average, but those who started in a specific Lifestyle Fund and then altered their asset allocation significantly by selecting other investment options, earned a return of just 0.94 percent on average. "The results in regard to participants who altered their asset allocations over time are striking.  They demonstrate the value of our asset allocation investment options and point to the importance of maintaining your investment strategy over time and not over-reacting to market turmoil," said Ross.

"We believe our asset allocation portfolios when used in combination with our participant education materials may help participants stay the course with their investment strategies, which  matters when it comes to longer-term planning like preparing for retirement," said Ross. "The study has shown John Hancock's asset allocation options have worked well for participants, and we're continuing to work on making it easier for advisors to offer a variety of investment options to plan sponsors with an investment platform backed by our Fiduciary Standards Warranty."

About Burgess Management & Research
Burgess Management & Research Inc. is an investment consulting firm that specialized in the development and analysis of investments. The company's clients include brokerage firms, investment banks, and insurance companies in the U.S. and Canada. For more information, please see www.burgessresearch.com

About John Hancock Financial and Manulife Financial
John Hancock Financial is a division of Manulife Financial, a leading Canada-based financial services group with principal operations in Asia, Canada and the United States. Operating as Manulife Financial in Canada and Asia, and primarily as John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Funds under management by Manulife Financial and its subsidiaries were C$635 billion (US$574 billion) as at March 31, 2014. Manulife Financial Corporation trades as 'MFC' on the TSX, NYSE and PSE, and under '945' on the SEHK. Manulife Financial can be found on the Internet at manulife.com.

John Hancock offers and administers a broad range of financial products, including life insurance, annuities, investments, 401(k) plans, long-term care insurance, college savings, and other forms of business insurance. Additional information about John Hancock may be found at johnhancock.com.

To obtain group annuity investment option Fund sheets and prospectuses for each sub-account's underlying investment vehicle call 1-877-346-8378.  These documents contain complete details on investment objectives, risks, fees, charges and expenses as well as other information about the underlying investment vehicle, which should be carefully considered.  Please read these documents carefully prior to investing.

"The Outcomes of Participant Investment Strategies 1998-2012" is a commissioned study prepared for John Hancock Life Insurance Company (U.S.A.) (John Hancock USA) by Burgess Management & Research Inc. The study examined the performance of portfolios of 319,566 retirement plan participants contributing to their employer's defined contribution plans from 1998 through 2012 through 23,540 group annuity contracts issued by John Hancock USA and compared performance results of participants who directed all of their contributions to a single asset allocation investment option (a John Hancock Lifestyle Fund or a John Hancock Retirement Living Fund) versus participants who adopted any other strategy.

A Lifestyle Portfolio or Lifecycle Portfolio (referred to as "Fund" or "fund") is a "fund of funds" which invests in a number of underlying funds. The Fund's ability to achieve its investment objective depends on the subadviser's skill in determining asset class allocations, the mix of underlying funds and the performance of those underlying funds.  A Fund is subject to the same risks as the underlying funds in which it invests, which includes but is not limited to: Stocks can decline due to adverse issuer, market,  regulatory or economic developments; foreign investing, especially in emerging markets, has additional risks such as currency and market volatility and political and/or social instability;  the securities of small capitalization companies are subject to higher volatility than larger, more established companies; high-yield bonds are subject to additional risks, such as the increased risk of default. For a more complete description of these and other risks, please review the underlying fund's prospectus, which is available upon request.

There is no guarantee that any investment strategy will be successful in achieving its investment objectives and it is possible for an asset allocation Fund to lose all or part of its value.  Past performance is no guarantee for future results.

Neither asset allocation nor diversification ensures a profit or protection against a loss.  Asset allocation may not be appropriate for all participants particularly those interested in directing investment options on their own.

The John Hancock Fiduciary Standards Warranty is offered solely by John Hancock USA and John Hancock New York, and is available only to defined contribution plans as defined in section 3(34) of ERISA and is subject to certain terms, conditions, and limitations. For additional details, see the terms as outlined in the Warranty certificate or contact a John Hancock Representative.   

Group annuity contracts and recordkeeping agreements are issued by: John Hancock Life Insurance Company (U.S.A.), Boston, MA 02210 (not licensed in New York). John Hancock Investment Management Services, LLC, a registered investment adviser, provides investment information relating to the contracts.  Plan administrative services may be provided by John Hancock Retirement Plan Services LLC or a plan consultant selected by the Plan.  

NOT FDIC INSURED | MAY LOSE VALUE | NOT BANK GUARANTEED | NOT INSURED BY ANY GOVERNMENT AGENCY  

GT-I23994                                                                                         GA050114180033

¹ Participants in a group annuity contract issued by John Hancock Life Insurance Company (U.S.A.) referred to as John Hancock.  Results are not applicable to contracts issued by John Hancock Life Insurance Company of New York.

² John Hancock Internal Data, April 2014.

SOURCE John Hancock Retirement Plan Services