Deals and People July 2, 2021

Retirement Industry People Moves

Ascensus acquires health and benefits TPA provider; Putnam Investments announces developments to GAA team; Virtus Investment Partners enters acquisition with Stone Harbor; and more.

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Art by Subin Yang
Art by Subin Yang
Art by Subin Yang

Ascensus Acquires Health and Benefits TPA Provider 

Ascensus will acquire UnifyHR, a third-party administrator (TPA) that provides employee benefits administration and compliance solutions including Patient Protection and Affordable Care Act (ACA) compliance, Consolidated Omnibus Budget Reconciliation Act (COBRA) administration and eligibility verification services. It will immediately become part of Ascensus’ Health & Benefits line of business.

The transaction was expected to close on July 1. Terms are not being disclosed.

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Founded in 2013 and based in Irving, Texas, UnifyHR provides flexible and affordable support that helps employers manage complex employee benefits programs so they can focus on their core business. Its suite of offerings, managed through a proprietary system that also supports premium billing services and dependent eligibility audits, covers an employee’s entire lifecycle from new hire to retiree.

“UnifyHR has been highly successful in taking the complexity out of employee benefits administration and compliance obligations,” says David Musto, president and CEO of Ascensus. “By adding its knowledge and expertise to our Health & Benefits line of business, Ascensus reaffirms our commitment to helping employers satisfy their fiduciary and compliance responsibilities by making employee benefits easier to manage.”

“At UnifyHR, we take pride in our deep experience in employee benefits administration and compliance services, as well as our collaborative and close-knit culture,” says Allen Gehrki, UnifyHR’s president and CEO. “We’re looking forward to becoming part of Ascensus and continuing to deliver high-quality benefit services that are tailored to meet even the most complicated business requirements.”

“The comprehensive array of tech-enabled services offered by UnifyHR, spanning ACA and COBRA administration, state health insurance mandate filings, and eligibility verification, will expand Ascensus’ Health & Benefits solutions considerably,” says Raghav Nandagopal, Ascensus’ chief corporate development officer. “We’re delighted to welcome UnifyHR’s clients and associates to Ascensus and will continue to pursue opportunities to broaden our consumer-directed health care and employee benefits administration offerings.”

Putnam Investments Announces Developments to GAA Team

Putnam Investments has announced that Brett S. Goldstein has been named co-chief investment officer (CIO), global asset allocation (GAA), effective June 30.

Goldstein, who will also serve on the firm’s operating committee, has been a member of Putnam’s GAA team for over a decade and is a portfolio manager on several of the firm’s multi-asset funds.

Goldstein and his co-chief investment officer, Robert J. Schoen, who was appointed to the senior investment role in November 2016, will be jointly responsible for the overall strategy and positioning of the firm’s GAA products. Together, they will oversee portfolio construction and risk management for GAA portfolios and the research that drives equity security selection strategies.

“Asset allocation is an increasingly dynamic area of investing, presenting an array of new opportunities for the marketplace,” says Aaron M. Cooper, chief operating officer (COO), Putnam Investments. “The broad expertise and deep experience of Rob Schoen in the multi-asset arena, combined with the portfolio construction acumen of Brett Goldstein, particularly in the target-date investment sphere, will provide strong and strategic leadership in guiding the firm’s GAA efforts for the exciting journey ahead.”

Goldstein has a bachelor’s degree in applied economics and management and in biometry and statistics, and a master of professional studies degree in statistics from Cornell University. He holds the Chartered Financial Analyst (CFA) designation.   

In another development, Schoen indicated that Adrian H. Chan will become a named portfolio manager on all Putnam GAA products.

Virtus Investment Partners Enters Acquisition with Stone Harbor

Virtus Investment Partners Inc. has entered into an agreement to acquire Stone Harbor Investment Partners LP.

Stone Harbor offers credit strategies, primarily to global institutional clients, including sovereign wealth investors, pension plans, foundations, endowments and insurance companies. Its strategies are also available through open- and closed-end mutual funds, including the Stone Harbor Emerging Markets Debt Fund (SHMDX), and to non-U.S. investors through UCITS and QIAIF pooled funds.

Virtus says the addition of Stone Harbor as an affiliated manager will further enhance and diversify Virtus’ investment capabilities with an emerging markets debt strategy that has a 30-year track record. It is also slated to also increase Virtus’ non-U.S. institutional client base, expand global distribution resources and add a proprietary operating and analytical platform that offers end-to-end investment and risk management technology, including an environmental, social and governance (ESG) framework, which can be leveraged by other affiliates.

”We are pleased to add Stone Harbor as an affiliated manager. Its culture and approach is strongly aligned with our core beliefs of providing high-quality, attractive investment strategies and exceptional service to clients,” says George R. Aylward, president and CEO of Virtus. “Stone Harbor’s institutional-quality emerging market debt capabilities are well-respected among clients and consultants and highly complementary to our other fixed-income capabilities. In addition, its global distribution resources will augment our existing sales capabilities supporting other affiliates.”

As a boutique affiliate, Stone Harbor will maintain autonomy over its investment processes, brand and culture, ensuring continuity for its clients, consultants and distribution partners, who will collaborate with the same investment teams.

Distribution Head Joins OneAmerica Retirement Services

OneAmerica Retirement Services (RS) President Sandy McCarthy has hired Mike Domingos as head of distribution. Domingos will lead the RS sales, business development and sales support teams across all market segments.

“Mike will be instrumental in furthering a vision and strategy for distribution in line with our multiyear plan, which is intently focused on strategic and significant growth and enhancing customer and distribution partner relationships,” says McCarthy. “Mike brings a wealth of industry experience across all market segments, as well as a passion for empowering people and driving processes to enable growth.”

McCarthy adds, “Mike is a wonderful fit with the OneAmerica values and culture, which keep people at the center of our strategy.”

Prior to joining OneAmerica, he served as the head of sales and strategic relations at Prudential Retirement, a business unit of Prudential Financial Inc. Domingos will start at OneAmerica on July 12.

“This is an exciting time to join OneAmerica as the company continues to build upon the recent momentum of its retirement business and to grow and invest strategically,” Domingos says. “I look forward to working with an exceptional team at a values-driven organization to deliver great service and solutions that enhance our adviser, sponsor and participant experiences.”

Domingos’ team will include responsible in five key segments: core market sales, mid- and large market sales, specialty market sales, business development and sales support.

LeafHouse Announces New Analytics Director

LeafHouse Financial, a third-party discretionary investment manager focused on retirement plans, has added Michael Garberich as senior investment officer and director of analytics.

“Michael’s role as director of analytics will be a key position as we continue to innovate in both our Investment Fiduciary line of business, and our technology company, investGrad,” says Todd Kading, president at LeafHouse. “Our initiatives in transformational leadership will benefit from Michael’s unique insights and understanding within the retirement plan industry.”

“I am thrilled to be joining LeafHouse and investGrade,” says Garberich. “I look forward to contributing my expertise and collaborating with the team to bring powerful new retirement solutions to market and help the firm grow.”

The Cerrado Group Acquires Nexus Administrators

Nexus Administrators Inc. is joining The Cerrado Group, effective July 1. Fresno, California-based Nexus is one of the largest retirement plan administrators in central California and among the largest in the state.

Nexus CEO Tom Tsaris says, “We at Nexus are absolutely thrilled to be a member of The Cerrado Group, because the core principles of experience, expertise, collaboration, community involvement and philanthropy that embody the essence of The Cerrado Group mission have also been the driving forces behind Nexus Administrators’ growth over the last three decades. Partnering with The Cerrado Group members to enhance our position within our profession, increasing the awareness to others of the value TPAs [third-party administrators] bring to the retirement plan space, formulating ongoing influence amongst our industry partners and creating new tools to benefit the retirement experience for all can best be accomplished via the collaboration inherent with The Cerrado Group involvement.”

“We are so pleased to add Nexus as another quality firm to our membership. Tom is a well-known and respected member of our industry and with their vast experience in the marketplace offering solutions as well as top-notch administration, they were a perfect addition to our group. As a growing entity, they contribute a wealth of knowledge and diversity to the entire industry and will be a valuable asset to our goals of educating our industry for the betterment of all,” says founding member and industry veteran Trina Gross, CEO of Nashville based Acuff & Associates.

The addition of Nexus brings the Cerrado Group membership to 11 firms. These firms have a footprint that covers more than 75% of the nation and service retirement plans of all types that total more $26 billion in assets under management (AUM). Group members, while remaining independent regional operators, actively combine their resources to fully serve the retirement plan industry at large.

HSBC Asset Management Finances Launch of Female-Owned, ESG Investment Firm 

HSBC Asset Management is taking a minority stake in Radiant ESG, a US-based, environmental, social and governance (ESG) and diversity and inclusion (D&I)-focused consulting firm. The firm was co-founded by Heidi Ridley and Kathryn McDonald, former CEO and head of sustainable investing at Rosenberg Equities, respectively.

With HSBC Asset Management’s backing, Radiant ESG will become RadiantESG Global Investors, a female-owned, independent asset management firm focused on next-generation ESG investment opportunities for institutional and wealth management clients worldwide. 

The RadiantESG team has deep expertise in equity investing and ESG data analysis, research and insight. Ridley and McDonald have over 50 years’ combined experience and each spent two decades at Rosenberg Equities, which they led to become the first fully ESG-integrated quant firm in 2017.

RadiantESG Global Investors intends to launch the next phase of its growth later this year with two investment strategies anchored on its proprietary “Positive Change” concept of ESG, which captures ESG leaders, ESG evolvers and United Nations Sustainable Development Goal (UNSDG)-aligned companies. The strategies will aim to address shifts in demographics and growing demand for more sustainable investment solutions.

The newly formed firm intends to grow its team over the course of the year and will seek an additional strategic partner to assist with infrastructure and distribution in the U.S. and key markets.  

Nicolas Moreau, CEO at HSBC Asset Management comments, “The essence of true global leadership is to change the status quo and this partnership is a perfect example of a direct social impact investment, demonstrating our commitment to furthering diversity in the asset management industry. When investing is combined with a team built upon diversity, inclusion and entrepreneurism, truly great outcomes are possible for our clients.”

“We are delighted to have the backing of an organization with the caliber and reputation of HSBC Asset Management, who has consistently demonstrated the characteristics we believe are paramount to a strong cultural foundation, an innovative mindset and a client-first focus,” add Ridley and McDonald in a joint statement. “We are deeply committed to positive progress on ESG issues, D&I, and playing a strong advocacy role within the industry on these topics. We believe in the power of inclusive culture within the asset management industry. These shared values form a strong foundation for the cultural and philosophical alignment between HSBC Asset Management and RadiantESG. We are also united in our effort to lead positive change within the asset management industry.”

BNY Mellon WM Selects Investor Solutions Head

BNY Mellon Wealth Management has named Sinead Colton Grant as global head of BNY Mellon Investor Solutions LLC. She will be leading the firm’s multi-asset solutions business, which has more than $29 billion in total assets under management (AUM) and advisement as of March 31.

Sinead has over 25 years of financial industry experience, including a decade with BNY Mellon. She most recently served as deputy chief investment officer (CIO) and head of equities for BNY Mellon Wealth Management. She led the large cap U.S. equity, equity trading and capital markets advisory groups. She also serves as head of responsible investing for wealth management and digital assets. Prior to joining BNY Mellon Wealth Management, she served as head of global investment and product strategy for Mellon Investments. Before joining BNY Mellon, Sinead was managing director of investment strategy for the Multi-Asset Client Solutions group at BlackRock and held positions at JP Morgan and Invesco.

“We are delighted to welcome Sinead to our Investor Solutions team. We look forward to drawing upon her deep multi-asset experience in serving our clients as their needs and markets continue to evolve,” says Catherine Keating, CEO of BNY Mellon Wealth Management.

Sinead will succeed Jamie Lewin, who is returning home to the United Kingdom with his family. Sinead is based in New York and reports to Keating.

Sinead received a bachelor’s degree from Dublin City University, Ireland, and a Master of Science degree in finance from London Business School. She was honored as one of the Irish America Wall Street 50 in 2018 and 2019, which recognizes the contributions of Irish American and Irish-born leaders in the financial industry.

Compliance July 2, 2021

Plaintiffs Allege Adviser Committed Fraud, Assessed Hidden Commissions

The plaintiffs in a new fiduciary breach lawsuit say they have been misled by a financial adviser into buying commission-based life insurance products, rather than the retirement-focused investments they believed they were purchasing.

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Rogers Transport Inc., a Tennessee small business that provides freight transportation services to its clients, and its managers have filed a fiduciary breach lawsuit against a financial adviser and the National Life Insurance Co.

The complaint underscores the risks facing small business owners as they seek out, review and hire financial advisers and service providers. 

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According to the complaint, Kewin Rogers is the founder, CEO and president of Rogers Transport Inc. In 2017, the complaint alleges, Rogers was referred to a Tennessee-based financial adviser named Samuel Holden, as Rogers was seeking a financial adviser that could lower or optimize the taxable income of Rogers Transport Inc., while also provide for an investment option for managers of the company.

The plaintiffs allegedly met with Holden several times in person and over the phone in 2017. During those meetings, the complaint states, Holden explained that he had a plan that could decrease the tax liability of Rogers Transport Inc. and provide great investment returns to management who participated in the plan.

“Holden represented that this was a plan targeted for management only and not for all employees,” the lawsuit alleges. “Holden advertised that the plan would be funded through life insurance annuities with life insurance policies for participating managers. Holden held himself out as an insurance agent and financial adviser capable of providing sophisticated investment and tax solutions for companies.”

As alleged in the complaint, in their meetings, Rogers repeatedly told Holden that he had no interest in obtaining life insurance because he already had life insurance and such an option was not what he wanted for himself or for Rogers Transport Inc. However, according to the suit, Holden informed the plaintiffs that life insurance was required under the plan to capture the tax benefits.

“Holden never disclosed that he received a commission for the sale of life insurance,” the plaintiffs say.

According to the complaint, the adviser presented the plaintiffs with plan illustrations authored by National Life Insurance Co. Holden allegedly used these illustrations to demonstrate that his plan would provide a great investment option that “would allow the plaintiffs to capture investment earnings fast while offsetting tax liability to Rogers Transport Inc.”

“Rogers trusted Holden’s oral representations about the value his scheme would bring,” the complaint states. “After the plaintiffs further emphasized that they did not want nor need life insurance, Holden told the plaintiffs to not worry and that any payments under his plan would go towards investments. Rogers asked a few questions about the nature of the plan, to which Holden responded: ‘The details of the plan are too complicated for you to understand.’ Holden emphasized that the complexity of the plan was required to harvest maximum tax benefits [while] providing an excellent investment vehicle and that life insurance was a required part of executing the plan.”

The plaintiffs say they agreed to make payments as directed by Holden, in exchange for him establishing the proposed plan to accomplish the objectives set forth.

“Upon information and belief, there is no written agreement between the parties, and this was an oral contract,” the complaint states. “Holden’s regular course of dealing with the  plaintiffs was to speak only on the phone or in person. After agreeing with Holden to go forward with establishing his plan, Rogers received a defined benefit [DB] plan packet from Pentegra Retirement Services. Upon information and belief, Holden used Pentegra to create plan documents based upon the design of Holden. The plan presented was titled: ‘the Datair Mass-Submitter Prototype Non-Standardized Defined Benefit Pension Plan (Non-Integrated).’”

The plaintiffs say a Datair Mass-Submitter Prototype Non-Standardized Defined Benefit Pension Plan (Non-Integrated) is “a complicated plan that a reasonable person would not understand without the guidance of an experienced professional in the qualified plan industry.”

“In reliance on Holden’s representations that his plan would accomplish the plaintiffs’ goals, Rogers, on behalf of Rogers Transport Inc, authorized Holden to establish and operate his proposed plan,” the suit states. “The plaintiffs trusted Holden as an expert and as an apparently sophisticated financial adviser who knew what he was doing in regard to the proposed plan and who represented the plan would accomplish their objectives. The plaintiffs placed their trust in Holden that the plan would accomplish the goals of lowering the tax liability of Rogers Transport Inc. and providing investment returns to plan members as Holden continually represented. In reliance on Holden’s representations, and in reliance on the plan coming from a legitimate insurance company (National Life Group), Rogers trusted Holden and agreed for Holden to establish his proposed plan based on the representation that payments would offset the tax liability of Rogers Transport and provide Rogers a way to invest income.”

The suit continues: “However, Holden never intended to provide any investment opportunities and made all of the foregoing representations with the intent to deceive the plaintiffs. Specifically, Holden deceived the plaintiffs to think the payments to National Life under his plan would accomplish their goals when Holden never intended to invest their money and intended to direct all of the plaintiffs’ funds to National Life insurance premiums, from which he earned a substantial commission and from which National Life profited from.”

The complaint alleges Holden never formally established a qualified pension plan and never invested any money and, instead, structured the relationship with National Life so that all payments went to a National Life insurance policy, all to his profit and to the profit of defendant National Life Insurance Co.

“Holden insisted that he needed complete authority to execute the plan due to its complexity,” the suit alleges. “The plaintiffs gave signed authority for Holden to establish his investment plan. Holden never revealed any executed plan documents to any plaintiff. The plaintiffs thus have no signed trust agreement, contract or any other signed documents. Contrary to Holden’s representations that payments would go to insurance annuities and other investments, all of the plaintiffs’ payments to National Life Insurance went directly to life insurance premiums and zero dollars were placed into annuities or investments of any kind. Holden told the plaintiffs to continue making payments to National Life as part of their investment. In fact, these were all payments made solely for insurance policies.”

According to the complaint, in November 2019, after repeated attempts to get real data from Holden, plaintiffs “vehemently demanded” that Holden produce proof as to where the plaintiffs’ money was and informed Holden that they would not make any additional payments.

“In response,” the complaint says, “Holden gave plaintiffs a consolidated statement of the returns of their investments, dated as of June 2019. … This was a completely fraudulent document that Holden drafted with the intent to deceive the plaintiffs in continuing to make payments to National Life. … The plaintiffs, however, became suspicious of the performance numbers that Holden represented to them and again began to ask about the performance of their investment and to see additional statements of income. After repeated refusals to show the plaintiffs how their investments were performing, the plaintiffs came to distrust Holden and decided to meet with a new agent to advise them on what exactly Holden was doing with their monies. On September 3, 2020, the plaintiffs were advised that Holden never invested their money, never established a proper qualified plan and directed all of the plaintiffs’ money into National Life insurance premiums and zero to investments.”

The full text of the complaint, which was initially filed in a Tennessee state court before being moved to a federal court and being repleaded as an Employee Retirement Income Security Act (ERISA) matter, is available here. Holden has not responded to a request for comment about the litigation, and National Life Insurance Co. has declined to comment.

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