Deals and People February 1, 2019

Retirement Industry People Moves

Voya names Government practice leader; Mercer reveals key leadership appointments; JHRPS discloses succession of TPA head; and more.

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Art by Subin Yang
Art by Subin Yang

Art by Subin Yang

OneAmerica RS Brings In Leader in Business Development

OneAmerica Retirement Services (RS) president Sandy McCarthy has named Lynne Smith to a new role leading Strategy and Business Development for the RS division.

Smith will have direct responsibility for business and plan development, product development and execution, growth and service model strategies, participant services (including education) and enrollment functions. 

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“Lynne’s experience and proven track record of creating, managing, and distributing products and services and leading initiatives that enable companies to compete more effectively will be invaluable to us as we position OneAmerica for continued growth,” says McCarthy. “Adding expert leadership to our talent base further demonstrates our commitment to the long-term success of OneAmerica in the marketplace.” 

Smith’s leadership includes roles at Smith Barney/Citigroup, CitiStreet, ING Group/Voya Financial and most recently, BMO Harris Financial Advisors as chief operating officer. 

A graduate of Cornell with a bachelor’s in agricultural economics, she also earned a master’s in business administration in international marketing from Hofstra University. 

Smith will report directly to McCarthy. Her team will include Tammy Ouverson, Business Development Leader; Terry Burns, Product & Investments Leader; Kevin Kidwell, Tax Exempt Leader; Brian Giles, Growth and Service Model Owner; and a to-be-named Participant Services Leader. 

Northern Trust Names Head of Global FX 

Northern Trust named Paul Fyda as head of Local Markets for the Global Foreign Exchange team.

Fyda joins with 20 years of experience in the foreign exchange (FX) markets. Based in New York, he works with Northern Trust’s FX desks in the Americas, Europe, Middle East and Asia-Pacific regions and is available to Northern Trust’s institutional investor clients to provide support and guidance in operationally complex and highly regulated emerging markets.

“We are pleased to add a leader with Paul’s breadth of experience to our global FX business. Paul will work extensively with our institutional clients providing them with insights and expertise in understanding how their investment decisions may be impacted by currency trading restrictions and regulations,” says John Turney, head of Global Foreign Exchange at Northern Trust. “This further endorses our commitment to building out our innovative FX capabilities and delivering market-leading services to our clients.”

Fyda comes to Northern Trust from Brown Brothers Harriman & Co, where he focused on emerging and restricted market currencies and products. He previously held FX product and client service roles at Sungard (now FIS), BBH and the former Mellon Bank. He has a bachelor’s degree in finance from the University of Pittsburgh. 

“I am excited to join such a globally respected FX franchise and look forward to expanding our capabilities in these markets while working closely with Northern Trust’s growing and diverse base of clients,” Fyda says.

Aegon Moves Experienced Member to Distribution Team

Aegon Asset Management announced that veteran distribution professional Adria Hall has joined its U.S. institutional distribution team. Hall started at Aegon Asset Management in January 2017.

“We are pleased to welcome Adria Hall to our distribution team. As the firm grows, adding skilled and experienced professionals like Adria is essential to our continued success,” says Gary Black, US CEO for Aegon Asset Management.

Head of Institutional Sales T.F. Meagher adds, “Adria has earned the trust and respect of institutional investors and consultants, we’re thrilled to add her to our team.”

Hall will serve as senior director, institutional markets, working with public and corporate pension funds, endowments & foundations and consultants. Most recently, she was a director at HGK Asset Management and, before that, a managing director at Mesirow Financial. 

“Aegon’s reputation and expertise in fixed income solution-based strategies and history of responsible investing made this a particularly attractive opportunity for me. But more importantly, I believe Aegon is a perfect partner for pension plans facing an uncertain economy,” says Hall. 

Voya Names Government Practice Leader

Voya Retirement hired Amy Heyel as senior vice president, National Practice Leader, Government for the company’s Tax-Exempt Markets business.

In this new role, Heyel will be responsible for helping to further expand Voya’s brand presence in the Government segment of the Tax-Exempt defined contribution market through thought leadership opportunities along with successfully maintaining new and existing relationships with plan sponsors, intermediaries and consultants. Heyel comes to Voya with more than 25 years of experience in the retirement plan industry, serving plan sponsors for both public and Employee Retirement Income Security Act (ERISA) qualified retirement plans. Most recently, Heyel served as a retirement plan consultant at AndCo Consulting. She is based in Georgia and reports to Heather Lavallee, president of Tax-Exempt Markets.

“We are pleased to welcome Amy to the Voya team,” said Lavallee. “With over two decades of experience in the industry, and a specific focus working with government retirement plans, she will be a perfect a fit for this new role. We look forward to Amy’s support as Voya expands its leadership presence in this important market.”

“I am thrilled to join the Voya Retirement team and to assist in the growth of the firm’s government market presence,” said Heyel. “Voya’s commitment to servicing a large and growing business among governmental plan sponsors is very attractive to me. I am confident that my background in consulting with this segment and knowledge of the recordkeeping industry will add value to the needs of plan sponsors and participants that save with Voya.”

Heyel graduated from College of Charleston with a bachelor’s degree in Business with an emphasis on finance.

Interim CIO at Russell Investments Will Take Permanent Role  

Peter Gunning of Russell Investments will remain as global chief investment officer, a role he assumed on an interim-basis with the departure of Jeff Hussey in October 2018. Gunning has 23 years of investing experience at Russell Investments.

Gunning, who joined Russell Investments’ Sydney office in 1996, served as global chief investment officer in the firm’s U.S. headquarters from 2008 to 2013 and as CEO for Asia-Pacific since 2013. He is now based in Seattle, where he oversees all aspects of the investment division worldwide, including asset management, implementation and research. He also continues to oversee the firm’s Asia-Pacific business. He is a member of Russell Investments’ executive committee and global leadership forum and reports directly to Chairman and CEO Michelle Seitz.  

In addition to his role as global chief investment officer, Gunning continues to be responsible for strategic oversight of Russell Investments’ business in the Asia-Pacific region. Russell Investments’ local teams in the region include people who lead the charge to deliver asset consulting advice, capital markets research, implementation services, corporate master trusts, funds management, and alternative investments.

Before joining Russell Investments, Gunning held positions in risk and equity portfolio management, as a financial markets economist and as a fixed-income options trader. He holds a master’s degree in economics from the University of Sydney.  

WFAM Adds Global Portfolio Management Head

Wells Fargo Asset Management (WFAM) announced that Matthias Scheiber has joined the firm as global head of Portfolio Management, Multi-Asset Solutions.

In this role, Matthias will be responsible for developing and managing outcome-oriented multi-asset investment solutions as part of WFAM’s Multi-Asset Solutions team. Reporting to Dan Morris, who was recently appointed to head of Multi-Asset Solutions, Matthias brings 20 years of investment industry experience and joins a team of 25 multi-asset investment professionals globally. He is based in London. 

“With Matthias’s deep industry knowledge and long track record of delivering innovative solutions, we are even better positioned to meet our clients’ needs,” says Nico Marais, Co-CEO of Wells Fargo Asset Management. “We are excited to welcome him to Wells Fargo Asset Management.”

Matthias joins WFAM from Schroders, where he led the Multi-Asset team’s institutional mandates, involving risk-based investment solutions, alternative risk premia strategies, and global tactical asset allocation. Prior to Schroders, Matthias was a partner and fund manager at Aethra Asset Management, where he was responsible for the qualitative and quantitative investment research process, and managing absolute return products. He has also held senior roles at ABN AMRO Asset Management, and Raiffeisen Bank in Vienna.

Mercer Reveals Key Leadership Appointments

Mercer has recently announced the appointment of several new leaders in the company’s Wealth business.

Graham Pearce has been appointed global segment leader for Mercer’s defined benefit (DB) client segment. In his new role, Pearce will set and drive Mercer’s strategy for actuarial and investment advice and services within the DB segment, and ensure focus on innovative solutions for clients. In addition, he will work to accelerate Mercer’s sale and delivery of global actuarial and pension risk management advice and solutions. This post was previously held by Benoit Hudon, who recently took on the role of UK Wealth Leader for Mercer. 

Bruce Cadenhead assumes the role of global chief actuary, while continuing to serve as U.S. chief actuary. As part of this role, Cadenhead will partner with Mercer’s regional chief actuaries to facilitate the sharing of best practices worldwide. 

Cara Williams will take on the role of global segment leader for financial intermediaries and family offices, where she will be responsible for identifying new client solutions and opportunities.

Troy Saharic has been named Mercer’s global segment leader for defined Contribution (DC) and master trusts. In this position, Saharic will oversee the development of solutions to help clients navigate towards DC and master trust solutions.

Previously, Williams and Saharic’s duties were performed by Renee McGowan, who served as global leader for DC and individual wealth. McGowan now works as Mercer’s CEO, in the Asia Region.

Following a long and distinguished career in the investment consulting industry, Andrew Kirton, chief investment officer for Mercer’s Wealth Business, will be leaving at the end of March to pursue other interests. Andrew’s duties will be reallocated between Hooman Kaveh, global chief investment officer for Delegated Investment Solutions; Bill Muysken, global chief investment officer for Alternatives; Deb Clarke, global head of investment research; and Donn Cox, alternatives business leader. Clarke, Muysken and Kaveh have already held their respective roles for several years. Cox joined Mercer through the Pavilion acquisition, and was previously the global business leader for Pavilion’s alternatives business.

JHRPS Discloses Succession of TPA Head

John Hancock Retirement Services (JHRPS) announced that Heather Windjue will succeed Head of TPA [third-party administrator] Strategy and Support Ann Slotwinski, who will be retiring after 37 years with the firm.

Windjue, a 22-year veteran of the retirement plan industry, had been serving JHRPS as assistant vice president of Operations Strategic Planning and Projects. She will report to Scott Francolini, senior vice president of Strategic Relationship Management and Consulting (SRM&C).

“Heather comes to her new role with strong existing relationships across the TPA community and a deep understanding of the TPA and John Hancock service model, operational efficiency, relationship management and strategic leadership,” says Francolini. “I look forward to her vision and leadership as she works to take the TPA team to the next level to support sales, retention and profitability, as well as to her joining the broader leadership team of SRM&C.”

Slotwinski will remain with the business until June and assist with the transition. She has been in TPA services for 23 years, seven of which she was head. In that role, she refined JHRPS’ TPA segmentation strategy, updated the TPA RMD role and oversaw the creation of the JHRPS TPAessentials program, providing TPAs with education, tools and programs to succeed in growing their businesses. 

Compliance February 1, 2019

Anthem 401(k) Fiduciaries Denied Summary Judgment in Fee Case

A federal judge found that the plaintiffs provided more than enough evidence to support excessive fee claims, noting that, “Plaintiffs cite deposition testimony of Anthem employees and Pension Committee members who indicate they do not understand the difference between different kinds of share classes or did not ask Vanguard whether lower-cost fee arrangements were available for the plan.”

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In a second attempt to win an excessive fee suit filed by participants, fiduciaries of the Anthem 401(k) Plan were denied summary judgment on all counts.

According to the court document, the defendants assert four arguments in their motion for summary judgment: Plaintiffs’ money market fund claims are time-barred and legally and factually baseless; Plaintiffs’ excessive fee claims are time-barred and legally and factually baseless; Plaintiffs’ failure to monitor claim falls within their breach of fiduciary duty claims; and the document request claim fails as a matter of law because there is no evidence that the request was ever received.

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Money market fund claims

The defendants assert the plaintiffs’ money market fund claims are time-barred because they and the rest of the class were repeatedly informed, prior to December 29, 2012, that the Vanguard Money Market Fund was neither aiming to return, nor in fact returning, significant income on assets invested in it. Plan information provided to participants stated that the fund sought “to provide current income while maintaining liquidity and a stable share price of $1.”

U.S. District Judge Tanya Walton Pratt of the U.S. District Court for the Southern District of Indiana countered that the plaintiffs do not argue that offering the money market fund as the plan’s only capital preservation investment option was per se imprudent; they argue that, “Defendants’ fiduciary process in evaluating the fund lineup was imprudent.” Pratt cited a 7th U.S. Circuit Court of Appeals decision in which it said “either an expert opinion or actual harm would likely be necessary before” a participant “could know of the flaws in the substance of a fiduciary’s decision.”

Recently, the 9th U.S. Circuit Court of Appeals issued a decision in which it stated, “First, ‘actual knowledge of the breach’ does not mean that a plaintiff has knowledge that the underlying action violated ERISA. Second, ‘actual knowledge of the breach’ does not merely mean that a plaintiff has knowledge that the underlying action occurred. ‘Actual knowledge’ must therefore mean something between bare knowledge of the underlying transaction, which would trigger the limitations period before a plaintiff was aware he or she had reason to sue, and actual legal knowledge, which only a lawyer would normally possess.”

Likewise, Pratt found that the plaintiffs’ money market fund claim is not time-barred because, although the participants received disclosures of the nature of the investment options offered, they were not informed of how those options were chosen nor that there may lower cost or higher yield alternatives that the plan did not offer.

She added that the plaintiffs have established a genuine issue of disputed fact as to whether the process by which the Pension Committee managed the capital preservation funds offered in the plan comported with the Employee Retirement Income Security Act’s (ERISA)’s prudent fiduciary standard. “Some designated evidence suggests that the Pension Committee did at least discuss the possibility of adding other funds to the plan’s capital preservation options—including a stable value fund. But other evidence indicates the Pension Committee rarely considered whether a money market fund was the optimal investment tool for participants or whether some superior option was out there,” she said in her opinion.

Excessive Fee Claims

The defendants contend that the plaintiffs’ excessive fee claims are time-barred because the plan disclosed its expense ratios to participants, giving them actual knowledge of the facts giving rise to their complaints more than three years before the initiation of the lawsuit. They also argue that the plaintiffs have not made a viable claim for breach of fiduciary duty because ERISA does not mandate particular fee structures or share classes, nor does it mandate requests for proposal or negotiation at any particular frequency. In addition, the defendants allege that the plaintiffs cannot show any loss resulting from defects in the Pension Committee’s process of selecting recordkeeping fees.

Pratt rejected the defendants contention that the excessive fee claims are time-barred for the same reason as he did in relation to the money market fund claims. “The generic plan information defendants rely on to impute knowledge to the plaintiffs did not disclose that identical lower-cost alternative fee structures may be available, nor did it provide plaintiffs with actual knowledge of the defendants’ solicitation and monitoring process,” she said.

Pratt agreed that nothing in ERISA required the committee to use a flat fee structure or to avoid an asset-based fee structure. However, she said that is beside the point, as the plaintiffs do not argue that the defendants were duty-bound to implement a specific type of fee structure or asset class. They argue that ERISA required the defendants to consider, periodically, different types of fee structures to determine which structure would have resulted in the highest yield for participants. They further argue that ERISA imposed a duty on the defendants to review the plan’s recordkeeping fees and attempt to negotiate lower fees if the plan’s fees are unreasonable.

Pratt found that the plaintiffs designated more than enough evidence to create disputed questions of fact as to whether the defendants discussed or even understood the difference between certain types of fee arrangements, whether they periodically checked to see if the plan could pay lower administrative fees, and whether the defendants acted prudently regarding the fees paid by the plan. “Plaintiffs cite deposition testimony of Anthem employees and Pension Committee members who indicate they do not understand the difference between different kinds of share classes or did not ask Vanguard whether lower-cost fee arrangements were available for the plan,” she pointed out.

Pratt further ruled that the element of damages goes hand-in-hand with the reasonableness of the fees—if the defendants breached their fiduciary duty by failing to ensure the plan paid reasonable fees, that breach necessarily shrunk the plaintiffs’ investment by overpaying on administrative and investment fees.

Duty to monitor claim

The defendants argue that the duty to monitor claim is derivative of the money market fund and excessive fee claims, and because Pratt denied summary judgment on those claims, she denied summary judgment on the duty to monitor claim as well.

Document request claim

According to the court document, the plaintiffs’ second amended complaint alleges that one plaintiff sent a letter to the Pension Committee on October 5, 2015, requesting information, and her request went unanswered. The complaint alleges she sent a second letter on October 27, 2015, which also went unanswered. The defendants argue that the plaintiffs have not shown that the Pension Committee received the request; that the letters were not addressed to the proper recipient identified in the plan’s summary plan description; and awarding a penalty for violating this section of ERISA is at the court’s discretion, and the record does not reveal any bad faith on the defendants’ behalf in failing to respond to the request.

But, Pratt said the Pension Committee cannot avoid its statutory obligation to furnish plan information to participants by designating a third party and directing requests to that party in the summary plan description. “ERISA requires the ‘administrator’ to provide information, and it is the administrator who may be penalized when plan information is not provided,” she said.

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