Products April 27, 2023

Investment Product and Service Launches

Nationwide adds in-plan guarantee for managed accounts; Alto announces capital-raising platform to tap IRA Funds; and more.

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Nationwide Adds In-Plan Guarantee for Managed Account Participants

Nationwide announced it has made Income America  5ForLife, an in-plan guarantee solution, available for managed account programs on its platform.

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Income America 5ForLife provides a solution for investors who want advice on how to invest their retirement plan assets but need help in determining an appropriate allocation to a guaranteed lifetime income investment option.

“When the SECURE Act of 2019 opened the door for the expansion of in-plan guarantee solutions, we were among the first to market with a suite of products to help participants protect their assets and convert their savings to income in retirement,” said Eric Stevenson, president of Nationwide Retirement Solutions, in a statement.

The Income America 5ForLife Target Date Fund Series that launched in 2021 continues to be available. 

Morningstar Wealth Introduces Portfolio Analytics to ByAllAccounts

Morningstar Inc. announced Morningstar Wealth has added the portfolio analytics feature to its ByAllAccounts product.

ByAllAcounts is Morningstar’s data aggregation solution. The addition of the portfolio analytics features streamlines adviser workflows by using highly enriched investment data. The data can inform proposal generation, portfolio exposure and risk analytics, allowing advisers to optimize wealth through new investment opportunities.

“We offer wealth techs and broker dealers with the right combination of data and technology to help them cost-effectively provide advisors with the tools they need to service their clients and scale their practice,” said Katy Gibson, general manager and head of product at ByAllAccounts, in a statement.

MassMutual Expands Stable Value Offerings

Massachusetts Mutual Life Insurance Co. announced the launch of its Guaranteed Interest Account, an expansion to its stable value offerings for the defined contribution market.

The new product enhances the existing suite of general account, separate account, synthetic and commingled solutions. It is designed to serve DC plans and participants through institutional, intermediary and adviser channels.

“With this addition to our robust mix of solutions, we are further expanding MassMutual’s strong presence in the stable value marketplace,” said Aruna Hobbs, head of MassMutual’s stable value investments business, in a statement. “As a highly-rated mutual insurance company, we remain fully committed to serving the long-term interests of our stable value customers and their advisors.”

Summer Announces $6M in New Funding

Summer PBC, the certified B Corporation addressing student debt, announced it has raised $6 million in new capital, bringing its total to $18 million raised in funding to date.

Firms that participated in the financing included General Catalyst, QED Investors, Flourish Ventures, Greycroft, Story Ventures, Gaingels, Calm VC, Partnership Fund for NYC, Fenway Summer, BDMI and Avidbank.

Summer provides a digital solution that helps individuals plan for college costs, reduce the burden of student loan debt and optimize retirement savings. To date, the company has delivered more than $1 billion in total projected savings for borrowers across the U.S.

ShareBuilder 401K Offers Free On New 401(k) Plans

ShareBuilder 401k is offering free setup of 401(k) plans from April 25 through May 16 to help more small businesses start a 401(k) plan.

The firm’s limited-time offer allows self-employed business owners to receive up to $150 savings in setup costs, while businesses with employees stand to save as much as $750. These savings are in addition to those already provided by the SECURE 2.0 Act of 2022.

“Too many small business owners believe 401(k) plans are out of reach. When we look at the numbers, nearly half of America’s workforce is employed by small businesses, but less than one-quarter of these companies offer retirement plans,” said Stuart Robertson, ShareBuilder 401k’s president and CEO, in a statement. “We hope to help fix this disparity by making it free and easy to get set up with a 401(k).”

Alto Launches Capital-Raise Platform to Tap More Than $10T in IRA Funds

Alto Solutions Inc., a self-directed IRA platform that enables individuals to invest in alternative assets using their retirement funds, announced a solution for issuers to more easily raise capital by tapping into the more than $10 trillion held in IRAs.

The Alto platform simplifies raising IRA capital by replacing what was a people-and paper-intensive process. According to the firm, issuers can create an offering and invite investors through a few clicks on an end-to-end tech solution.

“Issuers have historically overlooked trillions of dollars in IRA capital because the process for accepting it was complicated and time-consuming,” said Eric Satz, Alto’s founder and CEO, in a statement. “Alto’s tech-forward capital raising platform is a game changer, enabling issuers to create an account, upload their financing documents, and invite investors, all in just minutes.”

Compliance April 27, 2023

Oilfield Services Company Baker Hughes Faces ERISA Lawsuit  

A class action complaint filed in Texas alleges fiduciary breaches by the company’s 401(k) plan.   

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A class action complaint, Jesus Espinoza et al. v. Baker Hughes Holdings LLC, claims the Baker Hughes Co.’s 401(k) plan did not adhere to fiduciary best practices to control plan fees and expenses, alleging one count of breaches of the fiduciary duty of prudence under the Employee Retirement Income Security Act. 

The lawsuit, filed in U.S. District Court for the Southern District of Texas, Houston Division, claims the Baker Hughes Co. caused the plan to pay excessive fees and unreasonable compensation to the plan’s recordkeeper—specifically by allowing the recordkeeper to receive compensation via “float” on plan participant money—resulting in high costs to plan participants, according to the complaint.

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“Defendant did not adhere to fiduciary best practices to control Plan fees and expenses,” the complaint states. “To the extent that Defendant made any prudent attempt to control the Plan’s expenses and to ensure the expenses were not excessive, Defendant employed flawed and ineffective processes, which failed to ensure that: (a) the fees and expenses charged to Plan participants were reasonable, and (b) that the compensation the recordkeeper received from the Plan was reasonable.”

The lawsuit asks the court to certify the class, to approve the plaintiff’s requested class period and for compensation to retirement plan participants, the court filing shows.

“The Plan suffered millions of dollars in losses caused by Defendant’s fiduciary breaches and remains exposed to harm and continued losses, and those injuries may be redressed by a judgment of this Court in favor of Plaintiff,” attorneys for the plaintiff wrote in the complaint.  

The plaintiff asked the court to find and declare that the defendant breached its fiduciary duties to participants; to find the defendant personally liable to restore all losses to the plan resulting from the breach of fiduciary duties; to determine the method for calculating plan losses and to order the defendant to provide all accounting necessary to determine the amounts the defendant must make good to the plan under ERISA, among other relief requested.

“Plaintiff and the putative class members are entitled to receive benefits in the amount of the difference between the value of their individual Plan accounts currently, or as of the time their accounts were distributed, and what their accounts are or would have been worth, but for Defendant’s breaches of fiduciary duty,” the complaint states.

The complaint asks for the court to certify the class period between April 30, 2017, and the present, applying to all persons except the defendants’ fiduciaries and their immediate family members, who were participants or beneficiaries of the plan, the filing shows.

The Baker Hughes Co. 401(k) retirement plan held $3,815,191,486 in assets for 24,098 participants with account balances at the end of 2021, the court filing shows.

“Instead of leveraging the Plan’s assets and tremendous bargaining power to benefit Plan participants, Defendant caused the Plan to pay unreasonable and excessive compensation for recordkeeping and other administrative services to the Plan’s recordkeeper, Empower Retirement,” the complaint states. “[The] Defendant agreed to compensate the Plan’s recordkeeper by allowing the recordkeeper to receive compensation via “float” on Plan participant money.”

Float is money in transit in or out of the plan. Baker Hughes agreed that anytime plan participants deposited or withdrew money from their individual accounts in the plan, that money would first pass through the recordkeeper’s clearing account, according to the complaint.

“Defendant breached its fiduciary duty of prudence by permitting Empower and/or Alight Solutions to receive excessive compensation via float,” the complaint states.

Empower has served as the recordkeeper for the plan, with Alight Solutions in the role from 2017 to 2020, according to the complaint.

Baker Hughes is an oilfield services company that provides products and services for oil well drilling, formation, evaluation, completion, production and reservoir consulting. The company is organized as a corporation in Delaware and headquartered in Houston. 

A request for comment to Baker Hughes was not retuned.

The class of plaintiffs is represented by the law office of Chris Miltenberger PLLC, based in Southlake, Texas; attorneys from Wenzel Fenton Cabassa PA, based in Tampa Bay, Florida; and McKay Law LLC, based in Scottsdale, Arizona. The complaint did not include an attorney for the defendant.

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