Deals and People December 23, 2022

Retirement Industry People Moves

CBCF Names Verity’s Otto Vice Chairman; Spinelli promoted to co-CIO at Halbert Hargrove; Gallagher acquires Retirement, HR Advisory Buck; and more.

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Verity’s Al Otto Named Vice Chairman for the Center for Board Certified Fiduciaries

Verity Asset Management announced that the Center for Board Certified Fiduciaries appointed Al Otto Verity’s national director of plan governance solutions, as Vice Chairman of the CBCF.

Otto leads Vynntana, Verity’s plan governance platform that provides guidance and a suite of tools supporting 403(b) and 457(b) employer sponsors and the non-ERISA retirement plans they provide for their eligible K-14 public school, college, church, governmental agency and nonprofit employees, the Durham, North Carolina-based Verity said in a press release.

Otto joined Verity in 2018 and is a 20-year veteran of the retirement advisory and employer-sponsored plans industry, which includes experience founding several successful advisory and fiduciary-related businesses, the release said. He is also a published author and speaker on issues pertaining to tax-exempt retirement plan management, fiduciary governance and other related areas.

Halbert Hargrove Names Brian Spinelli Co-CIO

Halbert Hargrove, a fiduciary investment management and wealth advisory firm, promoted a senior wealth advisor and the chair of its investment committee, Brian Spinelli, to co-CIO.

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Spinelli joined Halbert Hargrove in 2006 and became part of the management team in 2012, the Long Beach, California-based advisory said in a press release. Spinelli’s role involved overseeing a range of investment responsibilities and wealth advisory services, the firm said.

As co-CIO, Spinelli will be responsible for the oversight and management of Halbert Hargrove’s investments and investment committee, as well as providing the general parameters for investment advice provided to the firm’s clients.

Halbert Hargrove’s announcement noted that it also promoted Tim Kohler to director of research and trading operations, David Koch to director of portfolio management and Taylor Sutherland to director of portfolio strategy.

Secure Choice Savings Board Appoints Todd Hassler as Executive Director

New Jersey’s Secure Choice Savings Board appointed Todd Hassler as the first executive director of its Secure Choice Savings Program.

The appointment concludes a nationwide search for a leader tasked with implementing a state-sponsored retirement plan designed to help private-sector employees save for the future, according to a press release from the Trenton, New Jersey-based Savings Board.

As executive director, Hassler will oversee the creation and operation of the New Jersey Secure Choice Savings Program, an initiative created by a law signed by Governor Phil Murphy which will provide a low-cost retirement plan for private-sector employees across New Jersey, according to the Savings Board. Once fully operational, the program could be responsible for receiving and investing more than $10 billion for the benefit of approximately 1.7 million workers. 

Most recently, Hassler served as senior investigator for the U.S. Department of Labor’s Employee Benefit Security Administration, a role in which he analyzed benefit plan designs and investigated operational failures. Prior to his role with the DOL, Hassler spent 15 years in the private sector in various roles overseeing retirement plans and human resources.


DEALS

Gallagher Acquires Retirement, HR Advisory Buck, NEK Insurance

Arthur J. Gallagher & Co. has agreed to acquire the partnership interests of Buck, a New York-based retirement, HR and employee benefits consulting and administration services firm with more than 2,300 employees and 220 credentialed actuaries. The transaction is expected to close during the first half of 2023, subject to customary regulatory approvals, Gallagher said in a press release.

Gallagher, a global insurance brokerage, risk management and consultancy firm, plans to acquire the interests of BCHR Holdings, L.P., Buck’s official name, and its subsidiaries for a gross consideration of $660 million (approximately $585 million net of agreed seller-funded expenses and net working capital), according to the release. The Rolling Meadows, Illinois-based firm made the purchase for benefits including expanding its work within retirement, benefits & HR consulting, administration and technology. The deal will also deepen Gallagher’s abilities in defined benefits consulting, plan administration, defined contribution and executive benefit consulting, among other areas.

Separately, Arthur J. Gallagher & Co. said it purchased El Cerrito, California-based NEK Insurance, Inc. Terms of the transaction were not disclosed.

NEK is a retail insurance agency specializing in property and casualty coverages for daycare centers and K-8 schools, residential care facilities and small remodeling contractors, with underwriting authority in these three segments, according to a press release. 

Kevin Bruns, Jennifer Sylvestri, Kyle Peterson and their associates will be part of Gallagher’s San Francisco branch under the direction of Jim Buckley, head of Gallagher’s Northwest region retail property and casualty brokerage operations, according to the Gallagher release.

Heffernan Buys SGB Insurance Services

Heffernan Network Insurance Brokers, a subsidiary of Heffernan Insurance Brokers providing market access and support services to insurance agencies, has acquired SGB Insurance Services, located in Wildomar, CA.

Scott Becker, the founder and president of SGB, joined Heffernan Network, along with five of his team members, effective November 1, the Walnut Creek, California-based Heffernan Network said in a release.

SGB specializes in providing personal lines and commercial lines of coverage. The company will operate autonomously as a subsidiary agency of Heffernan Network, leveraging its market access, resources and support to grow, according to the release.

As part of Heffernan’s growth strategy, the company is seeking to collaborate with privately held independent brokers across the United States, the firm noted in the release.

M&T Bank’s Wilmington Trust to Sell CIT Business to PE Firm

Wilmington Trust, a wealth management subsidiary of M&T Bank, has agreed to sell its collective investment trust business to private equity firm Madison Dearborn Partners.

Upon completion of the transaction, the CIT business will become an independent company with a new brand name owned by funds affiliated with MDP, according to a press release.

The CIT business, part of Wilmington Trust’s institutional client services division, provides third-party trustee and administrative services to asset managers and the employer-sponsored retirement market. The business has delivered consistent year-over-year revenue growth and currently manages about $115 billion in CIT assets for more than 550 funds across a family of about 45 subadvisors, according to Chicago-based MDP.

“This transaction will enable our remaining ICS businesses to deepen their focus on clients and further optimize their products and services as ICS continues to execute its vision to become the global leader in institutional trust services,” Jennifer Warren, senior executive vice president and head of Wilmington, Delaware-based ICS, said in the release.

MDP’s experience with scaling and growing businesses in the financial services industry will enable Wilmington Trust’s CIT business to deepen and expand its trustee and administrative services customer relationships through increased investment in product capabilities, technology solutions (including the recently launched BoardingPass platform) and strategic acquisition opportunities, according to the companies.

The transaction is expected to close no later than mid-2023 and is subject to customary closing conditions and regulatory approvals. 

Bass Pro Groups Re-Ups with Voya for Retirement Benefits

Voya Financial announced it has been retained as the recordkeeper and service provider for the Bass Pro Group 401(k) Retirement Savings Plan.

The Windsor, Connecticut-based Voya extended its four-year relationship with Bass Pro in October, according to a press release. The Bass Pro Group 401(k) Retirement Savings Plan is a defined contribution plan that allows plan participants to direct the investment of their retirement accounts. This is a large market client for Voya, and the workplace retirement plan supports more than 10,000 individuals, the release stated.

Headquartered in Springfield, Missouri, Bass Pro Group is a privately held American retailer that that runs Bass Pro Shops, which specialize in hunting, fishing, camping and other related outdoor recreation merchandise.

Voya will provide plan members with access to myOrangeMoney, an interactive and educational participant website experience, as well as access to the company’s financial wellness experience that seek to help inform, engage and encourage positive financial actions.

Voya serves 14.3 million individual, workplace and institutional clients with about $711 billion in total assets under management and administration as of Sept. 30, 2022.

Compliance December 23, 2022

Congress Passes SECURE 2.0

The sweeping retirement reform will usher in both short- and long-term efforts to expand retirement savings to more Americans.

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The SECURE 2.0 retirement legislation passed House of Representatives on Friday as part of a $1.65 trillion spending bill, moving to President Joe Biden’s desk for his signature.

Voting on the bill was split along party lines, passing by a vote of 225 to 201, with one lawmaker voting present. The bill cleared the Senate on Thursday.

Biden has until December 30 to sign the legislation because both the House and Senate this week also passed measures extending the deadline for funding the federal government. As a result, there is time for the yearlong spending measure to be formally processed and sent to the president, avoiding a government shutdown.

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The passage of SECURE 2.0 would be the second round of large-scale retirement reform since the Setting Every Community Up for Retirement Enhancement Act passed in 2019. SECURE 2.0 was the combination of three separate bills seeking to broaden retirement saving among Americans in both participation and volume, particularly for lower-income workers and among small businesses.

One observer called the latest legislation a bigger deal for the retirement security than 2019’s SECURE Act.

The response to SECURE 2.0 across industry associations, recordkeepers, advisory firms and annuity providers is largely positive, with industry participants seeing opportunity to expand retirement benefits among plan sponsors and participants. Though the votes were split in the House, retirement legislation is often described by analysts as an area of collaboration between parties, and the package was passed the same year that longtime retirement champion Rob Portman, R-Ohio, announced his departure from the Senate.

The ERISA Industry Committee, a national lobbyist for large employers that provide retirement and health benefits, praised the passage and noted it included several of its policy recommendations.

“We are pleased that Congress has supported on a bipartisan basis many of ERIC’s commonsense recommendations, which together will enable employers to enhance health care and retirement benefit plans for millions of employees, retirees and their families,” James Gelfand, president of the ERIC, said in a press release.

SECURE 2.0 seeks to expand retirement coverage to more Americans through both short- and long-term proposals. These include pushing out required minimum distributions from tax-free savings plans to 73 next year from 72 in 2022; mandating new 401(k) and 403(b) plans automatically enroll participants with a deferral of at least 3% of their salary by the end of 2024; and increasing tax credits for low-income savers in 2027.

Other policies seek to address more systemic issues in the retirement system. These include the Department of Labor having two years to create an online database of plans so employees and employers can identify missing or forgotten retirement accounts to reduce so-called savings “leakage.” The new law will also allow employers to match student loan payments with plan contributions in an attempt to help people focused on paying off student debt build a retirement nest egg.

Expanding access and uptake by participants to save toward a guaranteed monthly retirement paycheck beyond Social Security was another key area of focus. To that end, the bill increased the amount of retirement account funds that can be used for a Qualified Longevity Annuity Contract from $135,000 to $200,000. These contracts are designed to provide guaranteed monthly paychecks until death to supplement Social Security and be safe from market volatility.

“SECURE 2.0 will help strengthen Americans’ retirement readiness through provisions that will reduce barriers to annuitization, increase access to workplace retirement plans and improve opportunities to save for retirement,” Kourtney Gibson, the chief institutional client officer for the Teachers Insurance and Annuity Association said in a press release. “We look forward to working with Congress in the new year and building upon these important, foundational reforms to make a financially secure retirement attainable for all.”

The policy will also expand the use of pooled employer plans, or PEPs, beyond 401(k) retirement plans to nonprofit 403(b) plans. PEPs were first launched in the initial SECURE Act to help small businesses join collective retirement plans to reduce administrative and cost burdens, though uptake so far has been relatively slow.  

“We are optimistic about what this can mean for the expanded adoption of pooled employer plans,” Melissa Elbert, a partner at PEP-provider Aon said in a statement. “We have already seen how PEPs can provide significant savings for participants and ultimately improve their retirement outcomes while also easing the burden of plan management for employers. The PEP model is more efficient for everyone.” 

The Work Begins

Now that the bill is passed, retirement industry players will be able to start getting to work on the “pipes” that will need to be created, both within 401(k) plans and in messaging to participants for these new policies to get results, says Jennifer Doss, senior director and defined contribution (DC) practice leader at Captrust Financial Advisors.

“Most of the policies are a year or two out, because the industry is not ready in terms of immediate implementation,” Doss says. “Particularly from a retirement plan, recordkeeper perspective, they have to figure out how to make all this work. … It will take a year or two to build out and get all the technology up and running.”

One policy that will be immediate in 2023 is an increased tax credit for businesses that start an employee retirement plan that will pay the cost of startup for the first three years, Doss says. That may kickstart businesses who had been waiting for the incentive, as well as those that might want to avoid the automatic enrollment mandate that will not kick in until later.

“We could see a lot of plan creation starting next year, and ultimately it could be for people who want to start a plan but don’t want to have it be automatic enrollment and want to get out in front of that,” Doss says. “There’s a little bit of a delay [to the mandates], so you can still get a startup credit, but you don’t have to necessarily do all those other things going forward.”

Jon Chambers, a managing director at SageView Advisory Group, says the success of every policy is not certain, and each will ultimately depend on industry and participant demand and uptake.

“There’s plenty of examples of legislative actions that have unintended consequences or just get ignored,” Chambers says, noting the example of in-retirement plan annuities to provide income in retirement. “We’ve seen a number of regulatory moves, but have seen very little plan sponsor uptake on that overall.”

Chambers notes an example of policy that may not take off is the emergency savings option. As an untested addition to a 401(k) plan, he finds it hard to say yet if people will leverage it at the levels policymakers may expect.

On the other hand, Chambers says plan sponsor clients frequently ask about the student loan match program as a way to potentially recruit and retain talent.

“The student loan program is something we see a lot of demand for, and that is something that could take off quickly,” Chambers says.

 

 

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