Deals and People June 16, 2017

Retirement Industry People Moves

Texas TRS CIO steps down; Heffernan Financial Services expands adviser team; Todd Organization hires partner for executive benefits consulting; and more.
Reported by

Texas TRS CIO Steps Down

The Teacher Retirement System of Texas (TRS) announced that TRS Chief Investment Officer Thomas “Britt” Harrisis leaving the agency to serve as the chief investment officer for The University of Texas Investment Management Company (UTIMCO), a 501(c)(3) investment management corporation.

Get more!  Sign up for PLANSPONSOR newsletters.

Harris joined TRS in November 2006 as its chief investment officer. He previously served as chief executive officer of Bridgewater Associates, chief investment officer and president of Verizon Investment Management Corporation, chief investment officer and president of GTE Investment Management Corporation, and managing director for Asea Brown Boveri.

When Harris joined TRS, the pension fund was valued at $100 billion. Shortly after his arrival, however, the fund’s value dropped to $67 billion during the 2007-08 financial crisis. Under Harris’ leadership, the TRS investment team skillfully guided the fund back to financial health as evidenced by its $140 billion value today.

Harris restructured and expanded TRS’ investment division, implemented leading-edge portfolio management strategies, guided development of a new asset allocation policy and entered into a series of innovative strategic partnerships. With Harris’ guidance, the agency’s world-class staff has earned TRS a reputation as a top investment industry leader with highly regarded performance, innovation and effective risk management.

TRS Executive Director Brian Guthrie announced that, effective immediately, TRS Deputy Chief Investment Officer Jerry Albright will serve as interim chief investment officer. Albright is chairman of the Internal Investment Committee and sole director of TRICOT London, the first international office for the TRS pension fund. Albright previously served as TRS Investment Division’s chief operating officer as well as the director of investment operations.

At their July meeting, the TRS Board will consider plans for filling the chief investment officer position on a permanent basis.

NEXT: Ibis Capital Expands Retirement Plan Services

Ibis Capital Expands Retirement Plan Services

To support the needs of business owners who are opening small-to-mid size operations, Ibis Capital is expanding its Retirement Plan Services. The boutique wealth management firm’s retirement business offers plan implementation coordination of plan conversion, and quarterly employee education; as well as access to service providers, third party administrators (TPAs) and relationship managers.

“We are committed to expanding our portfolio to better serve the industry,” says Robert Meyer, CEO and CIO of Ibis Capital. “Providing business owners with retirement plan designs tailored to their unique needs is a focused and natural next step for Ibis.”

Ibis notes that fee compression and the Department of Labor's (DOL)’s fiduciary rule could have a particular impact on small-business owners.

“We understand the specific challenges that our clients face in an ever-changing financial landscape, and can help them routinely monitor their plans to maximize benefits at all levels of the organization,” says Meyer.

NEXT: SSGA Names Head of SPDR Sales

SSGA Names Head of SPDR Sales

Kathryn Sweeney has joined State Street Global Advisors (SSGA) as head of SPDR Americas Institutional sales. She will be responsible for defining and leading the execution of the SPDR Americas Institutional Sales Strategy. Sweeney will also collaborate with the Americas Institutional Client Group (ICG) team under Barry F.X. Smith, head of the Americas ICG at SSGA, to drive ETF sales with asset owners.

Sweeney joins SSGA from Goldman Sachs, where she spent more than 19 years. There, she played a strategic role in building out its ETF business, first in London and then in New York. She held a variety of roles, most recently as global head of Distribution and Product Strategy for the Securities Division. She worked closely with ETF asset managers, institutional trading desks and internal stakeholders to increase ETF activity. Prior to this, she held roles as head of US ETF Execution and Risk, and as an ETF trader in London and New York.

“ETFs are being used by a greater number of institutional investors seeking to reduce fees and increase the liquidity and transparency of their holdings,” says Nick Good, co-head of the global SPDR business. “Our global SPDR ETF business has a strong track record of product innovation, including working with large institutional clients to develop products such as SHE, LOWC and SPYX to meet their specific investment needs. Given Kathryn’s visibility and relationships within the ETF industry we are confident that she will continue to advance the SPDR position in the institutional market, and we are excited to have her join our Global SPDR team.”

NEXT: Cohen & Steers Hires VP of Wealth Management

Cohen & Steers Hires VP of Wealth Management

Jessen Fahey has joined Cohen & Steers as vice president on the wealth management team, specializing in the defined contribution investment-only (DCIO) marketplace. With more than 22 years of experience in the retirement services industry, he comes to Cohen & Steers from Columbia Threadneedle. While there, he served as regional vice president of sales, directing initiatives and coaching wholesalers for the company's DCIO effort. Based in Colorado, Fahey will cover the Western United States.

"Defined contribution is a critical focus for Cohen & Steers," says Charlie Wenzel, senior vice president and head of Wealth Management Defined Contribution. "We expect the implementation of fiduciary best practices will cause DC asset allocations to migrate toward those of institutional investors, where real assets are more widely utilized. Jessen will play a strategic role in growing the firm's DCIO business, educating 401(k) advisers, fiduciaries, model managers and retirement platforms about the potential of real assets to help participants improve their retirement plan outcomes."

NEXT: Heffernan Financial Services Expands Adviser Team

Heffernan Financial Services Expands Adviser Team

Jennifer Owen has joined Heffernan Financial Services as an adviser in the Irvine, California branch.

With more than 10 years of experience in the financial services industry, she began her career with MetLife working in sales, training, and advanced planning. She also consulted with financial advisers, clients, and their legal and tax advisers on investment management, retirement, tax planning, and trust and estate planning. Later, she worked at BNY Mellon Wealth Management specializing in the investment and planning needs of high net worth clients.

"We're excited to add an experienced certified financial planner to our team," says Blake Thibault, managing Director, Heffernan Financial Services. "Jen shares our passion for promoting financial wellness and literacy and we look forward to her helping our clients with all their financial needs."

Owen graduated cum laude from the University of Arizona's Eller College of Management with a bachelor’s degree in finance. She is a Certified Financial Planner, practitioner and Retirement Income Certified Professional (RICP).

NEXT: Todd Organization Hires Partner for Executive Benefits Consulting

Todd Organization Hires Partner for Executive Benefits Consulting

National executive benefits consulting firm The Todd Organization announced Kurt Snyder has joined its St. Louis office as a partner.

Snyder brings with him 15 years of experience in the executive benefits industry serving financial institutions. He’s versed in the design, financing and administration of executive benefit and bank-owned life insurance plans. He’s worked for various financial institutions from community banks to large money center institutions.

Snyder began his career with The Todd Organization in 2002 as a financial analyst in its Greensboro, North Carolina, office. In 2007, following a strategic partnership that Todd formed with the Newport Group, Snyder joined the Newport Group where he held several positions of increasing responsibility throughout the next 10 years, most recently as vice president of Financial Institutions.

“Kurt Snyder knows how to help financial institutions put in place customized, highly effective executive benefits programs. He has a deep understanding of all issues pertaining to executive benefits and bank-owned life insurance, and will be a great addition to our team,” says Bob Scharff, a senior consultant for The Todd Organization, based in its St. Louis office.

Data and Research June 16, 2017

Smart Beta Seeks Next Generation TDFs

Asset managers are taking the next steps in TDF innovation and many are eyeing strategic beta for higher returns and lower risk.  

Reported by

The defined contribution (DC) space is currently dominated by target-date funds (TDFs). These professionally managed portfolios rebalance participant assets over time by shifting more weight toward bonds and other income-driven investments as opposed to more volatile securities like stocks. But, critics argue that these funds don’t account for individual risk tolerance and they can’t always protect against volatility especially during a market downturn —  a matter that’s especially threatening to those nearing retirement.

In response, fund managers are redesigning these widely-used funds and turning to new strategies including smart beta. According to global research firm Cerulli Associates, 38% of asset managers surveyed believe it is highly likely for smart beta to become a feature of next-generation U.S. target-date products. Fifty percent believe it is somewhat likely.

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

Strategic beta or “smart beta” strategies aim for enhanced, risk-adjusted returns by tracking an index based on specific rules or preferences. As opposed to conventional market-cap-weighted passive allocations, these funds weigh securities based on specific factors such as performance, dividends, value, volatility and more. In this sense, smart beta seeks to outperform passive indices by taking an active investing approach.

“In a target-date market dominated by low-cost, passive providers, strategic beta strategies are a way for active managers to compete with pure passive on cost while retaining some of the value-add tenets associated with active management,” explains Dan Cook, analyst at Cerulli. “For the larger target-date providers, strategic beta series can also serve as another option in their target-date product suite, giving plan sponsors the choice between passive, active, and strategic beta.”

Cerulli notes that the increased scrutiny of investment management fees in a low-return DC environment has supported the argument to incorporate smart beta strategies into TDF innovation. Add to that the uncertain interest rate climate and reports indicating overall low returns for the foreseeable future, and smart beta may seem appealing to some fund managers.

Some providers have already rolled out smart beta TDFs. Blackrock recently ran an analysis comparing the performance of several market-cap indices through a hypothetical working lifetime against its smart beta portfolios. It found that in each case, the strategic beta portfolios outperformed their indices.

According to the latest report by Cerulli, “Asset managers incorporating strategic beta into their target-date series could find success by positioning their products as cost-effective strategies capable of reducing volatility and sequencing risk for retirement investors when markets decline.”

Cerulli puts the general cost of smart beta at 25 to 50 basis points depending on the complexity of the strategy.

But while smart beta strategies may help TDF investors mitigate risks and improve their retirement readiness, it likely would complicate the due diligence process at the plan level. This is especially important for DC plan fiduciaries who would have to navigate the ever evolving regulatory space following the implementation of the Department of Labor’s Conflict of Interest Rule. The fiduciary scope will likely tighten as TDFs continue to grow as one of the main drivers behind Americans’ retirement readiness in the DC space. Cerulli finds that as of 2016, TDFs accounted for $1 trillion of 401(k) assets or 52% of all 401(k) contributions. The firm projects that figure will jump to 75% by 2020. Thus, asset managers bringing new TDF products into the DC market will also have to bring all the necessary material to help fiduciaries administrate these products through a well-structured due diligence process.

Cerulli concludes that “Innovation from industry players and increased focus from plan participants could move the retirement readiness needle in the right direction.”

These findings are drawn from the second quarter 2017 issue of “The Cerulli Edge – U.S. Retirement Edition.” Information on obtaining a copy of the report can be found at Cerulli.com.

«