A significant number of non-monetary settlement terms have been agreed to, including that TIAA will add more non-proprietary investment options to its own retirement plan and reconsider how its treats revenue sharing payments.
TIAA has reached a settlement agreement in a proposed class
action lawsuit brought by its own employees, accusing the company of
self-dealing within its own retirement plan, in the U.S. District Court for the
Southern District of New York.
The case history Richards-Donald
vs. TIAA lines up closely with other
“self-dealing” challenges filed in district courts across the U.S. by
participants in retirement plans at companies that offer retirement investment
products and services. These companies broadly turn to their own investment
products and recordkeeping services rather than shopping around in the wider marketplace, leading
participants to argue their plan sponsors are not doing all they can to operate
the plan prudently and ensure both expenses and conflicts of interest are
minimized.
This particular settlement ties back to a compliant
initially filed in October 2015, which accused TIAA of breaching fiduciary
duties under the Employee Retirement Income Security Act (ERISA) and engaging
in self-dealing and prohibited transactions by favoring for its own retirement
plans investment options, managed by TIAA or affiliated entities, and by having
TIAA provide recordkeeping services to boot. Plaintiffs argued that the strong prevalence
of revenue sharing on the investment menu and a lack of low-cost passive investments also represented a conflict for TIAA,
as both the recordkeeper and fund provider.
For its part, TIAA argued the services it delivers to its
own retirement plan are of the highest quality and appropriately priced, and
the firm continues to deny any wrongdoing here. As a TIAA spokesman writes, “While TIAA strongly denies these claims, to avoid the significant time, cost and distraction of ongoing litigation, we agreed to settle. We value our people and are committed to providing our employees with retirement plans that help ensure their financial well-being, and have always acted in their best interests.”
The parties in the case have
engaged multiple times in court over these arguments, including participating
in mediation before retired District Court Judge Daniel Weinstein, which led to
the current settlement agreement. Details included in the text of the settlement agreement
show it will apply to “all participants in the Teachers Insurance and Annuity Association
of American Retirement Plan from October 14, 2009, to April 30, 2017.” Aspects
of the settlement include both monetary amounts of approximately $5 million and
non-monetary settlement terms.
With the settlement agreed to by both parties, the district
court technically has dismissed the lawsuit with prejudice and released all
claims against TIAA. The settlement agreement includes extensive language,
amounting to dozens of pages, seeking to insulate TIAA from any further claims
along these lines.
NEXT: Broad
non-monetary settlement terms
In
addition to the $5 million settlement fund that will, practically but not
legally speaking, pay back participants for the excessive fees they say they
paid to TIAA, the settlement agreement also includes “certain therapeutic
measures relating to the plans and their participants and beneficiaries … to
the extent non inconsistent with ERISA.”
For example, TIAA has agreed to add at least 10
non-proprietary investment options to the plans, of which five will have
investment management fees of 15 basis points or less. TIAA further “agrees to
request the least-expensive share class available to the plans for these
non-proprietary investment options.”
In the event new options pay revenue sharing, TIAA “agrees
to credit the revenue sharing payments to the participants in the plans whose
accounts are invested in the non-proprietary funds on a proportional basis.” This was seemingly a major point of contention for participants, who argued that TIAA's retention of revenue sharing was impermissible under ERISA
A significant number of other non-monetary settlement terms are
described, including that on a one-time basis TIAA will provide the class with overview
information about the changes being made to the investment menu, particularly with
respect to fees and revenue sharing. TIAA also agrees to offer a brokerage
window to permit plan participants to invest in an even broader range of
non-proprietary mutual funds—and to employ independent consultants to help
oversee this transition process. In addition, TIAA agrees to implement an education
program “based on its reasonable judgement of what is in the best interest of
plan participants and in accordance with the terms of the plans.”
The full text of the settlement decision further details
requirements TIAA will have to meet in order to resolve these claims and is
available here.
Hueler & NISA collaborate with focus on retirement income; United Financial NW joins PlanMember Securities Corporation; Industry vet returns to SSGA to lead DC business; and more.
Hueler & NISA
Collaborate With Focus on Retirement Income
Hueler Income
Solutions and NISA Investment
Advisors have formed an alliance with a mission to help defined
contribution (DC) participants focus on enhancing retirement income. NISA says its minority
investment in Hueler will allow both firms to create and deliver effective retirement-income
solutions in order to address the longevity risk of participants in the plans
they serve.
Working with NISA will help us realize our vision for the
next generation of technology and connectivity,” says Kelli Hueler, founder and CEO of Hueler Income Solutions. “This
collaboration allows us to enhance Hueler’s suite of services and delivery model
for the benefit of our existing client base and to capitalize on new business
opportunities to enhance lifetime income into defined contribution offerings. Importantly,
we remain an independent entity empowered to run our business consistent with
our longstanding focus on innovation and industry collaboration.”
NISA is an asset manager focusing on custom investment
solutions with more than $220 billion under management. Hueler is a market data
and research firm with an institutional priced annuity purchase platform.
NEXT: Capital
Fiduciary Advisors Team Joins Bronfman E.L. Rothschild
Capital Fiduciary
Advisors TeamJoins Bronfman E.L. Rothschild
Rockville, Maryland-based independent advisory firm Bronfman E.L. Rothschild LP welcomes a team
from Capital Fiduciary Advisors. The
team will be led by Capital Fiduciary
Advisors CEO John H. Wolff. He will become a principal and managing director
of Bronfman E.L. Rothschild. Also joining the team is Capital Fiduciary Advisors Managing Director Ted Leasure.
“John, Ted, and their team are a perfect fit for us,” says Neal Simon, CEO of Bronfman E.L. Rothschild. “They are true wealth managers who use an investment approach similar to ours.
Like us, they have a reputation for putting clients’ interests first, and I
believe their clients will benefit from our scale and resources.”
Wolff adds “Our firms operate with a similar philosophy
towards our clients’ advice and service. Bronfman E.L. Rothschild has smart and
talented people, excellent technology and a recognizable brand. By joining
their firm, we can expand the services we offer to clients; the firm has deep
resources to serve wealth management clients, institutions, and retirement
plans. Most importantly, we can continue to take care of our clients in the
fashion they have become accustomed to and deserve, and that means everything
to us.”
Bronfman E.L. Rothschild manages more than $4.5 billion in
assets. In January, the firm announced the acquisition of TriCapital Advisors
in Maryland. In March, it added Marilyn Napoli to its New York office.
NEXT: CIEBA Appoints
Executive Director
CIEBA Appoints
Executive Director
The Committee on
Investment of Employee Benefit Assets (CIEBA) announced
that Dennis Simmons has been appointed by the CIEBA
Board as their new executive director. Simmons joins CIEBA with more
than 20 years of experience in government policy, legal and
plan administration. He’s worked with all types of employee benefit
plan sponsor clients. He’s most recently worked at Vanguard, the
Malvern, Pennsylvania-based mutual fund provider.
"The CIEBA Board is very excited to
have Dennis join us at such an important time in CIEBA's history,"says Andrew T. Ward, CIEBA's Chair.
"CIEBA has a growing membership of plan fiduciaries who oversee
over $2 trillion on behalf of 15 million hard-working retirement
plan participants. CIEBA's voice will be critical as important
fiduciary and tax changes are being considered by the new Administration.
Dennis' advocacy experience will help CIEBA maintain a strong presence as
new public policies directly impacting plan fiduciaries and their participants
are contemplated."
Simmons will succeed Ray Kanner, the former CIO at IBM
"We'd encourage anyone who works with benefit plan
investments to consider joining up with CIEBA to take
advantage of the world-class network of investment fiduciary
plan sponsors," says Simmons. "We'd be glad to talk to anyone
who is interested in discussing our mission and values for strengthening the
private sector retirement system and enhancing retirement plan investment
management effectiveness."
NEXT: United
Financial NW Joins PlanMember Securities Corporation
United Financial NW
Joins PlanMember Securities Corporation
Jim Mustard and Nick
Hankerson, partners of United
Financial NW in Portland, Oregon, have announced their affiliation
with PlanMember Securities
Corporation as a PlanMember Financial Center.
This collaboration will allow the firm to expand retirement
investment planning and financial education opportunities for educators and
employees of nonprofits in Portland and the surrounding metropolitan area.
United Financial NW has about 700 clients in and around
Portland with $55 million in assets under management. In addition to
specializing in the 403(b) and 457(b) education market, the firm intends to provide
enhanced products and services to the 401(k) market and individual investors as
part of PlanMember.
Hankerson says, “We see PlanMember as an opportunity for
stability and consistency in leadership so we can grow our Financial Center. They
provide a team we can work with to help us service our school districts and
give our client base some consistency as well.”
PlanMember is a nationally recognized broker/dealer,
investment adviser, and member of FINRA/SIPC. It has established 30 Financial
Centers in 19 states, with a goal of expanding to 80 nationally. For more
information about PlanMember’s retirement solutions, visit www.planmember.com.
NEXT: Financial
Management Network Expands Retirement Business
Financial Management
Network Expands Retirement Business
Aran Sahagun has
joined Financial Management Network,
a California-based retirement plan consulting and advisory firm. He will be
tasked with 401(k) and pension plan management. Sahagun has 18 years of
industry experience behind him. He will assist employers and employees in
creating an effective plan in regard to efficiency and compliance. He’s held
roles in money management, investment modeling and 401(k) administration.
Sahagun graduated from the University of Redlands with a
degree in business management.
“Financial Management Network is expanding to support
pre-retirees as they work to save and prepare for retirement, and Aran is an
important component of that expansion,” says Financial Management Network Founder Curtis Farrell. “We look
forward to seeing our plan sponsor clients and employees enjoy the benefits of
his expertise.”
NEXT: Allianz Life
Hires COO
Allianz Life Hires
COO
Allianz Life Insurance
Company of North America has hired Tobias
Fritsch as chief operating officer
for the Allianz Investment Management (AIM) division. He will tasked with enabling
all hedging, investment strategy, and portfolio management activities for AIM.
Fritsch will lead the functions responsible for middle and
back office accounting and operations support, strategic IT systems, and
overall program and financial management. He will report to Allianz Life Chief Investment Officer Todd
Hedtke
“Tobias brings a strong understanding of global
Allianz
initiatives, which is hugely beneficial as our team collaborates with
colleagues around the world to direct our company-wide investment
strategy,” says Hedtke. “We are excited to utilize his vast leadership
experience in both
operations and investment management in order to make AIM a more
efficient and
effective organization.”
Fritsch joins Allianz Life from Allianz Global Investors
(AGI) in Berlin, Germany, where he was an executive program manager responsible
for leading a strategic initiative to redesign and transform the target
operating model of AGI. He was also responsible for an acquisition and
post-merger integration of Rogge, a global fixed income asset manager, into
AGI. Fritsch joined Allianz in 2009. He holds multiple advanced degrees in the
areas of business administration, eTechnical engineering, computer science,
economics, political science and government.
NEXT: Industry Vet
Returns to SSGA to Lead DC Business
Industry Vet Returns
to SSGA to Lead DC Business
Dave Ireland will
return to State Street Global Advisors to serve as the firm’s global head of
defined contribution (DC).
He will be tasked with leading the firm’s $421 billion
global defined contribution (DC) businessincluding all business
development activities, product development, thought-leadership, marketing, and
retirement-related public policy advocacy. Ireland will lead a global team of
more than 40 employees located in Boston, London and San Francisco.
Ireland served with SSGA for more than 13 years which saw
him fill various roles including US Consultant Relations, director of the North
American Defined Contribution Sales and Strategy and senior investment
strategist and portfolio manager for the Global Asset Allocation team. He was involved
in designing and distributing SSGA's Target Retirement Funds. He most recently
served as director of Defined Contribution Distribution at Wellington
Management, where he played a strategic role in building out its DC business.
“The defined contribution market continues to expand, both
in size and complexity,” says Barry F.X.
Smith, head of the Americas Institutional Client Group. “Plan sponsors and
the participants they serve face many challenges as they seek the shared goal
of a financially secure retirement. This includes providing the right
investment choices, educational tools and plan features that help participants
reach their goals. It will also soon include providing choices that help them manage
the income from their savings throughout retirement. Dave is a leader who has
been helping clients meet these challenges for many years and we are pleased to
have him re-join SSGA to help us make retirement work for everyone.”
NEXT: Pinnacle
Acquires TPA
Pinnacle Acquires TPA
Pinnacle Plan Design announced that it has acquired Kollman
& Associates, a local third-party administration and actuarial
consulting firm. The company brings employer-sponsored retirement plan
expertise to the team and will continue to serve current clients.
With the addition of Kollman, Pinnacle now has four enrolled actuaries and 23
professionals on staff to design and administer customized 401(k), profit sharing
plans and defined benefit (DB) plans.
"As a Baby Boomer, I see people in my generation aging,
experiencing health issues and moving on to a different life," says Barbara
A. Kollman. "Although I do not foresee an interruption in the
services I am able to provide, it is a concern to me as to what would happen to
my clients' retirement plans in the event I was unable to continue providing
on-going services, even if the disruption in service was for a short period of
time. Therefore, I have decided to join a larger pension company that has
an excellent reputation and together we will provide full administration and
actuarial services to my clients."
Amanda Iverson, CEO
at Pinnacle Plan Design adds: "Barb is a very well-respected member of
the retirement plan industry and the Phoenix community. We are very excited to
welcome her and her clients to the Pinnacle family as we continue to expand our
footprint in the Valley."
NEXT: T. Rowe Price
Expands DCIO Business
T. Rowe Price Expands
DCIO Business
Heidi (Walsh)
Delauter and Victoria Fung are
now senior defined contribution plan specialists with the North American Global
Investment Services division of T. Rowe Price. Delauter will be based in
Baltimore and support clients in the northeast; meanwhile, Fung will be based
in San Francisco and support clients across the western U.S.
Delauter rejoins T. Rowe Price from J.P. Morgan Asset
Management, where she served most recently as executive director and client
adviser in the firm’s defined contribution institutional group. Prior to her
time at J. P. Morgan, she spent 15 years at T. Rowe Price, where her roles
included vice president and director of consultant and adviser relations for
the firm’s retirement plan services division. Delauter holds an undergraduate
degree from Hood College and a master’s degree from the University of Maryland.
Fung comes to T. Rowe Price from BlackRock, where she was
vice president and senior account manager of institutional sales within the
firm’s defined contribution retirement group. Prior to her time at BlackRock,
Fung worked with Fisher Investments where she was a client account coordinator
and account executive. She holds an undergraduate degree from the University of
California, Berkeley.
T. Rowe Price’s Global Investment Services division offers
investment management services to institutional investors and financial
intermediaries around the world.
“T. Rowe Price’s DCIO business is a significant priority for
the firm,” says Michael Davis, head of
defined contribution plan specialists for GIS. “Heidi and Victoria are
great additions to our outstanding team of institutional defined contribution
plan specialists, who channel the firm’s global defined contribution expertise
to work with our clients in a strategic, solutions-oriented manner. We are
excited to welcome them to T. Rowe Price, and in Heidi’s case, to welcome her
back.”