Deals and People December 7, 2018

Retirement Industry People Moves

DWC – The 401(k) Experts brings in industry veteran as first in-house actuary; Ascensus adds two executives to retirement division; Willis Towers Watson announces leader of expat benefits solutions; and more.

Reported by

DWC – The 401(k) Experts brings in industry veteran as first in-house actuary

DWC – The 401(k) Experts has hired Joe Nichols as the firm’s first in-house actuary.

Nichols is joining the team in several capacities, the most significant of which is to streamline the way the firm works with defined benefit (DB) plans. As an enrolled actuary, he is also responsible for ensuring technical accuracy of the work product and effective communication of the results to plan sponsors, plan participants and other interested parties.

Over his 30-year career history, Nichols has worked with both national and regional actuarial firms, including as a founding owner of a pension actuarial and administration firm. In addition to his history of pension consulting and list of professional designations, Nichols also volunteers his time to the profession by serving as the secretary of the Board of Directors for the American Retirement Association, and he is a past president of both the American Society of Pension Professionals and Actuaries (ASPPA) and ASPPA College of Pension Actuaries (ACOPA).

Get more!  Sign up for PLANSPONSOR newsletters.

His work experience includes plan design, consulting, actuarial valuations, experience studies, projection modeling, cost studies and presentation as well as special consulting projects related to data analysis, benefit calculation programs, mergers and acquisitions, liquidity analysis and bankruptcy proceedings. His passion is working closely with clients to assist them in achieving their goals.

Ascensus adds two executives to retirement division

Ascensus has appointed Chad Brown and Mindy O’Connor to leadership positions within the firm’s retirement division. In these newly created roles, they will help to drive retirement plan sales. 

As division vice president, western region, Brown will help achieve national goals for retirement plan sales while leading a team of external sales associates alongside Ascensus veteran Anthony Bologna, who will continue to manage the eastern half of the sales organization.

Prior to joining Ascensus, Brown served as vice president, managing director of institutional plan sales at Transamerica, where he led a team focused on building strong business partnerships in the large plan space. He has also held positions at Nationwide Financial, First Citizens Bank, M&T Bank and Manning & Napier. Brown earned his bachelor’s degree in political science from the University of Nevada. 

O’Connor will serve as head of business development, leading a team charged with building and maintaining strong working relationships with broker/dealers, registered investment advisers (RIA), and third-party administrator (TPA) firms nationally.

Most recently, O’Connor served as managing director, business development, retirement for Transamerica, where she oversaw national relationships with key distribution partner firms while focusing on strategic growth and execution. She also held leadership positions in client development and worked in roles within relationship management and education services. She earned her bachelor’s degree in business management from Indiana University’s Kelley School of Business. 

Corporate Development executive joins FS Investments

FS Investments has hired Robert Stark as senior managing director of corporate development. His responsibilities will include developing and implementing the firm’s strategic plan and supporting the expansion into new sales channels, both domestically and internationally. Stark will split his time between the firm’s New York and Philadelphia offices and serve on the executive committee.

In his most recent position at J.P. Morgan Asset Management, Stark oversaw J.P. Morgan’s response to the Department of Labor’s (DOL) fiduciary rule reforms. Prior to that role, he was head of global strategic relationships and U.S. funds, responsible for national account relationships across all distribution platforms. Stark previously held the position of global head of strategy and business development at J.P. Morgan Asset and Wealth Management, where he oversaw long-term strategy and worked to improve the operating performance of each business. 

Earlier in his career, Stark served as global head of strategy and M&A at Russell Investments and as a partner with McKinsey & Company, where his international consulting practice focused on the financial services industry.

Stark is a graduate of the University of Cologne, where he studied strategic management, finance and logistics.

CBIZ purchases Sequoia Financial business unit

CBIZ has acquired Sequoia Institutional Services (SIS), a business unit of Sequoia Financial Group, effective December 1.

Founded in 2010 and based in Akron, Ohio, SIS provides retirement plan investment advisory services.

Jerry Grisko, president and CEO of CBIZ, says a strong cultural fit between SIS and CBIZ will allow the firms to provide clients with a broader array of services, backed by a larger team of professionals.

Mid Atlantic Capital Group acquires First Mercantile

Mid Atlantic Capital Group has closed on a transaction to acquire First Mercantile Trust Company from Massachusetts Mutual Life Insurance Co., as of November 30.

“We are continually looking for opportunities to improve our ability to serve our client base and provide our business partners with additional tools to expand their business,” says Paul Schneider, CEO of Mid Atlantic.

John Moody, CEO of Edge Holdings (the parent company of Mid Atlantic) says the acquisition represents the first of what the firm hopes will be many acquisitions designed to support its mission of providing quality technology, products and services to financial intermediaries.

Willis Towers Watson announces leader of expat benefits solutions

Willis Towers Watson appointed Pam Enright as leader of its expat benefits solutions business. In this role, Enright will oversee the growth and operations of the business, which helps multinationals determine the right mix of benefit coverage for their globally mobile workforce. Enright will report to Francis Coleman, managing director, global services and solutions, and will be based in Chicago.

According to the firm, internationally mobile employees often have specific challenges with respect to their benefits, which can vary greatly in each of the markets to which they are assigned. 

Enright has been in the employee benefit industry for over 25 years. Prior to joining Willis Towers Watson, she was a senior vice president and director of global benefits at Lockton Companies for over 12 years. There, she launched and developed the global benefits practice, including growing the expat benefits business. Prior to this, Enright was a regional sales director at Aetna Global Benefits. She has a bachelor’s degree in English from The University of Kansas.

The Standard promotes regional sales director to retirement plan VP

Rob Baumgarten of The Standard has been promoted to vice president of Retirement Plan Sales.

Baumgarten is a 20-year veteran of The Standard, having previously served in various sales leadership and management roles. Most recently he served as west regional sales director and was previously vice president of field sales, managing The Standard’s field sales team. In his new role, Baumgarten will have responsibility for the regional sales directors and managers, sales operations, institutional business development as well as retirement plan communications.

Baumgarten is a graduate of the University of Colorado in Boulder, where he earned a bachelor’s degree in business administration. He holds FINRA Series 7, 24, 63 and 65 securities licenses. He will be based out of The Standard’s Denver sales and service office.

White Oak Advisors joins retirement plan aggregator

White Oak Advisors, LLC has joined Strategic Retirement Partners (SRP).

Jim Robison, founder of White Oak Advisors, becomes SRP’s new managing director for the Great Lakes region. 

The White Oak team adds eight new colleagues to SRP’s ranks, including Jim Robison and Ric Clouse, who will be managing directors in the Great Lakes region. 

Investing December 7, 2018

Economists Remain Optimistic Despite Volatility

The top economists at J.P. Morgan Asset Management and Vanguard remind investors that volatility is normal, and that long-term thinking is a solution to short-term stress about equity prices.

Reported by

Vanguard this week published its 10th annual economic and market forecast, “Vanguard Economic and Market Outlook for 2019: Down but not out,” which a representative of the firm described as its most comprehensive recurring analysis on the state of the global economy and financial markets.

Despite slowing global growth, disparate inflation rates, and continued normalization of U.S. monetary policy, Vanguard economists believe that a near-term recession remains less than likely.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

“In short, economic growth should shift down but not out,” the white paper says. “From an asset return standpoint, Vanguard foresees a 10-year outlook for a balanced portfolio in the 4% to 6% range, representing a modest improvement over 2018.”

Joseph Davis, Vanguard’s chief economist, says that while market volatility over the past two to three months has some investors overly cautious going into 2019, his firm’s outlook, while still guarded for the near term, shows optimism for long-term investors.

“Higher short-term interest rates, coupled with improved international equity market valuations, slightly raises our expectations for long-term global investment returns for U.S. investors,” he says.

Giving some context to the bout of selling seen this week on Wall Street, Davis says there are some factors that point to a higher risk of a recession next year. Like other experts, he cautions investors about reading too much into catchy news headlines about the yield curve—which has not actually inverted—or other supposed indicators of an impending market crash.

“Vanguard’s analysis on the fundamentals and historical drivers causing recessions concludes that the more likely scenario is a slowdown in growth, led by the U.S. and China. However, the expected easing of global growth over the next two years is charged with economic and market risks,” Davis explains. “Potential scenarios include the possibility of a severe deceleration of China’s economy, a policy mistake by the Fed as it raises rates further into restrictive territory, trade tensions, and other geopolitical and policy uncertainties.”

He says his firm has, in recent years, been correct in its anticipation that globalization and technological disruption would make it difficult for economies—especially those of the U.S., Europe and Japan, among others—to reach and sustain 2% inflation.

“In 2018, Vanguard rightly anticipated a rise in core inflation across various economies,” Davis says. “For 2019, our economists do not see a material risk of further strong rises in core inflation despite lower unemployment rates and higher wages. Higher wages are not likely to funnel through to higher consumer prices, as inflation expectations remain well-anchored.”

For the U.S., Davis says Vanguard has confidence that the Fed will “continue on its gradual rate-hike path, reaching the terminal rate of 2.75% to 3% in mid-2019, followed by a pause or stop to reassess economic conditions.”

According to Vanguard’s analysis, the expected equity market returns in the U.S. are slightly lower than those for global or international markets, “which emphasizes the importance of global diversification going forward.”

“Vanguard’s outlook for U.S. equities over the next decade is in the 3% to 5% range, and we can expect to see equity valuations continue to contract as interest rates rise over time,” Davis says. “For non-U.S. equities, investors will likely see returns in the 6% to 8% range.”

Vanguard’s analysis concludes that, versus the firm’s previous reports, continued interest rate increases have positively benefited the investment outlook for fixed-income markets. Over the next 10 years, investors can expect to see global fixed-income returns in the 2.5% to 4.5% range. Non-U.S. bond investors could expect returns from 2% to 4%—slightly lower than the anticipated return of U.S. bonds, but also providing diversification benefits in a balanced portfolio.

“Given the somewhat challenging outlook ahead, it is important that investors focus on key factors such as saving more, spending less, and controlling investment costs, rather than concentrating on the less reliable benefits of ad hoc portfolio tilting,” Davis says. “Additionally, Vanguard believes investors should continue to adhere to time-tested investment principles such as maintaining a long-term focus, employing a disciplined asset allocation and conducting periodic portfolio rebalances.”

Similar take from J.P. Morgan Asset Management

On the same day Vanguard published its annual update, J.P. Morgan Asset Management Chief Economist David Kelly also briefed reporters about the current volatility, comparing this with his firm’s economic outlook for next year. He spoke on a panel that included four other top J.P. Morgan forecasters—all of them telling investors to remember that volatility is normal. They stressed that the lack of volatility in recent years has caused investors, many of them with portfolios tilted strongly toward risky assets, to be surprised by moves that would previously have been considered unremarkable.

Echoing Vanguard’s take, the J.P. Morgan leader said the most pressing question for 2019 is, can the U.S. economy slow down without stalling out? He said he remains more optimistic than not about avoiding a near-term recession, but, like Davis, he has some pressing concerns as well.

“Our 2019 assumptions still suggest increased global financial stability,” Kelly said. “This is a good thing insofar as it means recessions and downturns are likely to be weaker and shorter lived relative to, say, the Great Recession of 2008 and 2009. But, on the flip side, this also means that growth is likely to be slower—and that there will be fewer opportunities to exploit market rebounds.”

Kelly pointed to the firm’s recent 2019 to 2029 capital market assumptions report, “J.P. Morgan Asset Management 2019 Long-Term Capital Market Assumptions.” The full market report is quite dense, considering 50 different asset classes and sectors and featuring dozens of illustrative charts.

In U.S. equities, J.P. Morgan anticipates 5.25% potential growth on average each year for the next 10 to 15 years. According to Kelly, U.S. equities “look pretty good,” but the macroeconomic business cycle presents challenges to investors. The emerging challenges are reflected in recent stock market volatility.

One place where Kelly’s outlook seems to diverge at least a bit from Davis’ is on the global fixed-income picture. On the fixed-income side, there is “almost a new equilibrium forming,” Kelly said.

“We’ve had such great debt loads and such low interest rates for so long now that it has reshaped the behavior of central banks in a significant way,” he said. “We may even see central banks keep interest rates much lower than they have in the past, simply in order to help their governments finance these major debt loads. This in turn means we may be facing lower interest rates globally than we traditionally would expect, and for potentially quite a long time.”

For those investors who are having trouble stomaching the current bout of equity market volatility, Kelly and Davis agree that the best way to keep one’s footing is to think about what risks a portfolio is carrying and using this information to better define how the risk-taking is being compensated—or not. As Kelly said, the last decade has brought remarkably low volatility, and investors should expect a bumpier ride going forward, whether the markets go up or down in the near future.

“I think investors in particular should rethink liquidity risk and consider being compensated for accepting lower liquidity, for example in private equity,” Kelly said. “This type of investing will become more important as the cycle progresses.”

«