Financial Services

Of particular importance to the Council is the region's financial services industry. The financial services, insurance and real estate industries employ over 400,000 people throughout the region. Financial services has been a growth industry over the past decade in New England, which has made it a vital economic driver in the region. From the birth of mutual funds to the growth of 401k’s to the presence of the most noted insurance companies in the world, New England has long been associated with both tradition and innovation of financial services.

In order to strengthen our advocacy the Council formed a Financial Services Committee to provide a forum for the diverse financial services industry in New England to meet, discuss and advocate for public policy priorities that will strengthen the industry. Over the past several years, the Council has been active on a variety of issues of importance to the region including pension reform, terrorism insurance, privacy and tort reform.

• Mutual Fund Industry
• TRIA: Terrorism Risk Insurance Act

Advocacy:

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• All
• 2008
• 2007
• 2006
• 2005
• 2004
• 2003

• July 2008: NEC Support for Credit Union, Bank, and Thirft Regulatory Relief Act

Mutual Fund Industry

The first mutual fund was started in Boston in 1929. Since that time, the mutual fund industry has become closely associated with New England. There are currently over 8,200 mutual funds with over $6.3 trillion in assets, based on 2002 numbers. Over ninety million individuals own mutual funds in the United States. The typical fund-owning household has a median of $40,000 invested in four mutual funds. Mutual funds own over 20% of all U.S. corporate equity.

The growth of 401(k)'s and the corresponding expansion of the mutual fund industry resulted in enormous growth in the retirement market in New England. From 1990 to 2002, retirement assets held in all types of investment vehicles more than tripled from $4.1 trillion to $10.2 trillion, nationally. During this time, the mutual fund share of retirement assets quadrupled from 5% to 22%. The industry currently serves over 54 million mutual fund shareholders. These substantial increases were largely due to the shift to defined contribution plans (401(k)) – where assets have increased from $400 billion in 1990 to over $1.5 trillion in 2002. The greater utilization of IRAs, especially rollovers, has also contributed to the surge in mutual funds, totaling over $2 trillion.

Needless to say, New England is the center of retirement savings. Currently, New England’s financial services industry, which employs over 400,000 throughout the region, manages in excess of a trillion dollars in assets for tens of millions of retirement customers worldwide, capturing twenty-five percent of the retirement market. Four of the top ten managers of defined contribution assets are headquartered in New England.

It is of the utmost importance that the interest of the investor is accounted for and that legislative initiatives, if undertaken, actually advance the needs of the investor. The New England Council, and its many New England based members within the financial services industry, hope to be a resource to the delegation as specific legislation is considered.

Terrorism Risk Insurance Act (TRIA)

TRIA was enacted in 2002 after it became evident that policyholders in the transportation, energy, real estate, manufacturing, retail and entertainment industries were finding it difficult, if not impossible, to find adequate insurance coverage in the event of a terrorist attack. As we have stated in the past, it was vital both for the region and the nation that terrorism insurance legislation was enacted.

The fundamental purpose of TRIA was to return stability to the market so that policyholders could get the coverage they needed in a viable insurance marketplace. The legislation accounted for the complexity of the nation's unique insurance market and provided a federal backstop against potential losses.

TRIA sunsets at the end of 2005. Despite our hope at the time of passage that the private market would become viable, this does not appear to be the case. The New England Council supports a two-year extension to the TRIA program and extension of the "make available" provision to ensure greater market certainty. Failure to do so will effect policies that are negotiated this fall - but extend coverage beyond 2005.