Deals and People May 1, 2020

Retirement Industry People Moves

Callan names private equity SVP and IRI announces changes to executive committee and board of directors.

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Art by Subin Yang
Art by Subin Yang
Art by Subin Yang

Callan Adds Private Equity SVP

Callan has announced that Andrew Maday, CFA, CAIA, joined the firm as a senior vice president in the Private Equity Consulting group on April 1. He will focus on private equity research, including manager and fund sourcing and due diligence, strategic planning and portfolio modeling, and servicing clients. He is based in the Chicago office and reports to Pete Keliuotis, executive vice president and head of alternatives consulting.

“Andy has years of experience as an allocator within all areas of private markets, including servicing sophisticated investors as a senior member of an outsourced CIO [chief investment officer] platform,” Keliuotis says. “We’re excited to have him on our team and look forward to his contributions to our research and consulting efforts.” 

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Prior to joining Callan, Maday was a private markets analyst for Illinois Municipal Retirement Fund (IMRF), responsible for the development and oversight of the private equity, real estate, infrastructure, timber and agriculture portfolios. Prior to IMRF, he was a senior associate investment program manager at Northern Trust Asset Management, managing and implementing investment portfolios in an outsourced CIO capacity for institutional and high-net-worth clients. He also worked with Northern Trust in operational and administration areas.

Maday earned a master’s degree from Saint Xavier University and a bachelor’s in finance from the University of Illinois–Chicago. He is a holder of the right to use the chartered financial analyst (CFA) designation and the chartered alternative investment analyst (CAIA) designation.

“I am excited to help Callan continue to broaden the firm’s alternative solutions and position client portfolios to meet their objectives,” Maday says. “I have had a longstanding relationship with Callan and have seen firsthand the strength of the culture and the commitment to providing the independent thought leadership and customized solutions based on client interests and needs.”

IRI Announces Changes to Executive Committee and Board of Directors

The Insured Retirement Institute (IRI) has announced changes to its executive committee and board of directors.

Drew Bowden, senior vice president and general counsel, Jackson National Life Insurance Co., is now the chair of the IRI board of directors. John Kennedy, head of Retirement Solutions Distribution, Lincoln Financial Distributors is vice chair. Kennedy had been an at-large member of the IRI executive committee. New to the IRI executive committee is Terri Fiedler, president and chief executive officer, AIG Financial Distributors. Fiedler has been a member of IRI’s board of directors.

Joining the IRI board of directors are: Melissa Buccilli, director, head of Retirement Insurance, BlackRock; Robin Raju, managing director, head of Individual Retirement Business, Equitable; and Wes Severin, executive vice president, Retirement Division, Symetra Financial.

“We appreciate the commitment that each member of our board of directors and executive committee makes to IRI,” says Wayne Chopus, IRI president and CEO. “We welcome the new board members for their fresh perspectives and willingness to help lead our organization. The IRI board of directors is a true reflection of our membership, which represents the full supply chain of the retirement income industry and is the backbone of the value that IRI delivers.”

Compliance May 1, 2020

University of Miami Faces Lawsuit Over 403(b) Plan Fees

The plaintiffs say they seek similar remedies as those in a settlement that was court-approved in a case against Duke University.

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Another lawsuit has been filed challenging fees for a university’s 403(b) plan—this one against the University of Miami.

Similar to other university lawsuits, the complaint says that because the plan is so large—nearly $1 billion in assets for the University of Miami—it has “tremendous bargaining power to demand low-cost administrative and investment management services and well-performing investment funds.”

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The plaintiffs in the case allege that the university failed to investigate, examine and understand the real cost to the plan’s participants for administrative services, causing the plan and participants to pay unreasonable and excessive fees for investment and administrative services. Specifically, it says the university caused participants to pay an asset-based fee for administrative services that increased as the value of participant accounts rose, even though no additional services were being provided.

In addition, the lawsuit alleges that the University of Miami “selected and retained investment options for the plan that historically and consistently underperformed their benchmarks and charged excessive investment management fees, as well as share classes that were more expensive than other share classes readily available to qualified retirement plans that provided plan investors with the identical investment at a lower cost.”

The plaintiffs have a particular disagreement with the university’s selection of the TIAA Traditional Annuity as the plan’s capital preservation fund. The complaint says it prohibits participants from redirecting their investment into other investment choices during employment except in 10 annual installments, “effectively denying participants the ability to invest in equity funds and other investments as market conditions or participants’ investment objectives change.” The lawsuit notes that the Traditional Annuity also prohibits participants from receiving a lump-sum distribution of the amount invested in it unless they pay a 2.5% surrender charge that it says bears no relationship to any reasonable risk or expense to which the fund is subject.

The plaintiffs suggest that one could reasonably infer from these circumstances alone that the university’s fiduciary decision-making process “was either flawed or badly executed.” But, they say, there is additional evidence, “such as incorrect reporting on mandatory Department of Labor [DOL] disclosures about the amount of administrative fees paid by [the] participants.”

The complaint says the purpose of the lawsuit is to enforce the University of Miami’s liability under the Employee Retirement Income Security Act (ERISA) to restore to the plan all losses resulting from each alleged breach of fiduciary duty. However, the plaintiffs point out early in the lawsuit that their action is similar—but narrower in scope—to a lawsuit filed against Duke University and call attention to the fact that a final class action settlement was recently approved in the Duke case. “Plaintiffs here seek similar remedies that were court-approved in the Duke case,” the complaint says.

A database of 403(b) plan litigation maintained by Cammack Retirement shows 20 universities have faced similar lawsuits. Six cases have been dismissed, and eight have been settled.

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