Deals and People December 15, 2017

Retirement Industry People Moves

T. Rowe Price brings in new head of CEDT Innovation Center; USI Consulting hires assistant vice president of retirement services; StoneStreet rebrands as its services are expanded; and more.

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T. Rowe Pricerecently named Rajesh Eshwaras the head of client experience and delivery transformation (CEDT).

In this new role, Eshwar leads the firm’s CEDT Innovation Center, which focuses on delivering new client experiences using design and technology developments. Based in Maryland, Eshwar reports to Scott David, head of individual and retirement plan services, and works with leaders across the organization.

Eshwar joins T. Rowe Price from Capgemini Group, a consulting and digital services provider, where he served as executive vice president for North America. He holds bachelor’s and master’s degrees in engineering from the Indian Institute of Technology Bombay.

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USI Consulting Hires Assistant VP of Retirement Services

USI Consulting Group announced that Gilles Hudelot has joined the company as assistant vice president of retirement services, based in Dallas, Texas.

Hudelot has over 25 years of experience working with individual and employer sponsored retirement plans in both the private and public sector, spending the last six years as a retirement plan specialist for a national broker/dealer working with advisers and CPAs throughout the country. He has extensive knowledge of the products/services available in the marketplace and consults on fiduciary coverage, vendor selection, plan design, investments and employee education.

StoneStreet Rebrands as Services are Expanded

StoneStreet Advisor Group has announced it will begin doing business as StoneStreet Renaissance (SS/RBA).

The new branding accompanies an expanded offering of services designed to deliver a total value proposition to financial and human resources executives and teams responsible for their organization’s benefit programs. In addition to the current suite of service offerings centered on the successful operation of a company’s retirement benefits programs, SS/RBA has partnered with Financial Finesse to offer financial wellness program in the U.S. to companies of all sizes.

SS/RBA also expanded their service offerings to include health savings accounts (HSAs), student loan consolidation guidance, and individual wealth management services to work towards their goal of offering a more holistic, comprehensive path to financial independence.

VALIC Names New VP for West Coast Region

VALIC, a division of AIG’s Life and Retirement business, has named Chris Somers as vice president, business development, for the West Coast region.

Somers will work closely with advisers, consultants, and plan sponsors in Southern California, Nevada, Utah, Arizona and Hawaii to secure new group relationships for VALIC. 

Somers joins VALIC from Lincoln Financial Group, where he served as regional vice president for institutional retirement distribution. He previously held roles at PIMCO, Bank of America Merrill Lynch, and Fidelity. He earned his bachelor’s degree from Marist College in New York and his master’s of business administration from St. Mary’s College of California.

Glenmede Investment Management Appoints Former Director to Recently Created Position

Glenmede Investment Management LP (GIM), a privately owned, independent asset management firm, has announced the appointment of Samantha Lowry as director of Institutional Markets.

Lowry will focus on delivering GIM’s investment capabilities to a broad institutional audience, including U.S. and global institutional consultants. Lowry’s role is a newly created position that expands the firm’s distribution team and provides increased depth to support institutional relationship building.

Lowry most recently served as the director of institutional relationship management for Penn Capital Management, where she was a senior member of the distribution team and provided guidance on the development, launch and ongoing communications related to firm strategies. She has also held senior business development roles at Philadelphia International Advisors and Aberdeen Asset Management.

Lowry received a bachelor’s of arts degree in English from Temple University, as well as a master’s of business administration in management from Saint Joseph’s University.

Past Regional Director Joins PEI in Leadership Role

Portfolio Evaluations Inc. (PEI), an institutional investment and retirement plan consulting firm, has announced the addition of Laura Grassi to the business development team.

Grassi joins PEI in a leadership role as director of business development, where she will oversee the firm’s efforts in securing new business opportunities within existing and new market segments. 

Grassi comes to PEI with 15 years of experience working within the retirement plan industry. She started her career at ING Financial Advisers as a retirement plans wholesaler covering the state of New Jersey. She then moved to Empower Retirement/Great West Financial, where she maintained and grew their defined contribution (DC) plan business. Most recently, Grassi served as the regional director of sales at Pentegra Retirement Services, developing sales of ERISA [Employee Retirement Income Security Act] plan solutions through advisers, broker/dealers and financial institutions. 

Franklin Templeton Hires Two Senior Officials to Multi-Asset Solutions Group

Franklin Templeton Investments has announced the appointment of two senior hires to its multi-asset solutions group. Gene Podkaminer will join as head of multi-asset research strategies and, as announced earlier this month, Wylie Tollette will rejoin Franklin Templeton as head of client investment solutions.

Both will step into newly created roles that report to Ed Perks, EVP/CIO, Franklin Templeton multi-asset solutions. Podkaminer and Tollette will join the company on January 8, 2018.

Podkaminer will oversee multi-asset research strategies, including markets, asset class and manager research for the group. In this capacity, he will be a key contributor to the asset allocation strategy for investment solutions managed by the multi-asset solutions team. Podkaminer was most recently a senior vice president in Callan’s capital markets research group. In this role, he partnered with asset owners on strategic investment planning, including asset allocation and investment manager structure, and provided custom research on a variety of investment topics. Prior to joining Callan in 2010, he spent nearly a decade with Barclays Global Investors as a senior strategist in its client advisory group, where he advised some of the world’s largest and most sophisticated pension plans, nonprofits, and sovereign wealth funds. 

Podkaminer received a bachelor’s degree in economics from the University of San Francisco and an MBA from Yale University. He holds a chartered financial analyst designation. 

Tollette’s responsibilities will include oversight of client investment solution development for Franklin Templeton’s multi-asset solutions business. He will partner closely with the company’s global distribution groups on all solutions-related opportunities across a broad range of clients.

Tollette most recently served as chief operating investment officer for CalPERS. He brings close to 25 years of financial services experience—almost two decades of those years spent with Franklin Templeton. Prior to leaving in 2014, he served as head of Franklin Templeton’s performance analytics and investment risk group. Tollette earned a bachelor’s degree in economics from the University of California, Davis, and a master’s degree from the University of London. He holds a chartered financial analyst designation and is a certified public accountant.

Data and Research December 15, 2017

401(k) Fees Can Cost an Average Working Couple More Than $150K

For someone making $90,000 a year, that would jump to $277K, America's Best 401k says.

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While industry studies have shown that 401(k) fees have declined in recent years—the Investment Company Institute recently issued a report saying they averaged 0.49% in 2016, down from 0.51% in 2015—America’s Best 401k says that data is only part of the story.

As America’s Best 401k researchers note, fee data in the retirement industry is often based on the data that plan sponsors include on the Form 5500 that they file annually with regulators. However, in its white paper, “Fees Run High for Small Business 401(k) Plans,” the company points out that 89.9% of 401(k) plans, those with 100 or less participants, file a “short” version of Form 5500, which contains very little data and excludes pertinent information such as the name of the plan provider, compensation paid to brokers and advisers, compensation paid to recordkeepers and third-party administrators, and the mutual funds in the plan along with their corresponding expenses.

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“By omitting nearly 90% of all 401(k) plans from comprehensive analysis, one might draw false conclusions about broader industry trends, such as the lowering of fees or greater access to low-cost index funds,” America’s Best 401k says. Of course, due to their far larger stature compared with the smallest plans, the relatively small number of large and mega-size retirement plans represent a majority of all retirement plan participants/assets in the U.S. 

To generate a more complete picture of the fees paid by all participants, America’s Best 401k reviewed the thousands of participant 404(a)(5) and plan sponsor 408(b)(2) fee disclosure forms that it has received from small businesses. The company focused on the asset-based fees withdrawn from participant accounts, finding that the average working couple making $30,000 a year between them and contributing 5% each to their 401(k)s would pay $154,794 in 401(k) fees over their working careers. For a couple making $90,000 a year, that would be $277,000 in fees.

“It’s simple math that a reduction in fees, whenever possible, is important for the financial future of plan participants,” the company says.

Analyzing data from the top 11 providers to the small plan market, America’s Best 401k found that they charge an average of between 1.19% and 1.95% to participants.

“It’s worth pointing out that most of the plans had limited or no access to low-cost index funds,” the company says. “Certain plans, typically those with under $1 million in assets, are told they do not yet qualify for low-cost index funds until the asset size reaches a minimum level. Most plans in the analysis had exclusively or a substantial majority of actively managed funds. These are significantly more expensive than index funds and may also deliver a portion of their revenue to the providers or brokers in a practice known as revenue sharing.”

Citing data from BrightScope and the Investment Company Institute, the company notes that plans with assets exceeding $10 million pay an average of 0.27% in fees.

America’s Best 401k predicts that new providers will enter the market and offer low-cost index funds and actively managed funds without revenue sharing—“giving participants access to the same institutional share classes that much larger plans enjoy.” The company expects these fees to range between 0.55% and 0.75%.

The white paper can be downloaded here.

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