Deals and People November 30, 2018

Retirement Industry People Moves

DWS hires municipal bond director; PBGC announces several leadership appointments; Principal International names retirement income solutions leader; and more.

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DWS hires municipal bond director

DWS has added Chad Farrington as a managing director and portfolio manager on the municipal high-yield bond team. Based in Boston, Farrington will report to Ashton Goodfield and Carol Flynn, co-heads of the municipal bond department.

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“We are continuing to see opportunities in the municipal bond space as investors are looking for ways to diversify their asset allocation. The potential tax benefits of municipal bonds may make them a valuable addition for portfolio construction,” says Greg Staples, co-head of fixed income, Americas. 

With more than 20 years of industry experience, Farrington joins DWS from Columbia Threadneedle Investments, where he was the lead portfolio manager for a high-yield municipal fund. Farrington also ran the firm’s team of municipal research credit analysts and published numerous thought leadership pieces on the market. Prior to Columbia Threadneedle, Farrington worked with Fitch Ratings in several positions, including evaluating municipal government credits across the U.S.

PBGC Announces Several Leadership Appointments

The Pension Benefit Guaranty Corporation (PBGC) has announced four appointments to its leadership team, as follows: Ross Marcelin, deputy chief of negotiations and restructuring; Ted Goldman, director of the policy, research and analysis department; Kimberly Mayo, director of the budget department; and Jeffrey Donahue, director of the procurement department.

Marcelin will help manage the agency’s interactions with plan sponsors and pension practitioners, across both multiemployer and single-employer program operations. Marcelin is a certified public accountant, and graduated from St. Joseph’s College in Brooklyn, with a bachelor’s degree in accounting.

Goldman will play a key role in policy development, pension modeling and forecasting, and conducting retirement research. He has a bachelor’s degree in mathematics from the University of Missouri, Columbia. He holds multiple designations including Fellow of the Society of Actuaries, Enrolled Actuary, Member of the American Academy of Actuaries, and Fellow of the Conference of Consulting Actuaries. Goldman replaces Supervisory Actuary Jensen Chan and Senior Adviser for External Affairs Anne Henderson, who both served as acting policy directors during the past year. 

Mayo is tasked with the formulation and execution of PBGC’s annual operating budget and serves as PBGC’s primary liaison for budget matters with the Office of Management and Budget and the Department of Labor. In this position, Mayo is responsible for leading PBGC’s budget design, review and reporting functions. She also co-chairs PBGC’s Information Technology Portfolio Review Board. Mayo earned a master’s of business administration in international finance degree from George Washington University and a bachelor’s of science degree in business management from Hampton University. Mayo replaces Edgar Bennett, who retired at the end of October. 

Donahue, in his new role, will oversee the procurement process and acquisition solutions that support the agency’s mission. The PBGC Procurement Department manages the process of competing, awarding and administering PBGC contracts. Donahue has a bachelor’s degree in management from the U.S. Air Force Academy, and a master’s of business administration in global business degree from George Mason University. He replaces Chief of the Policy, Training, Compliance & Systems Division Steven Kvalevog and Senior Contract Specialist Roland Thomas, who both served as acting procurement directors during the past year.

Principal International Names Retirement Income Solutions Leader

Renee Schaaf, currently senior vice president and chief operating officer of Principal International, will become the new president of retirement and income solutions, effective March 1, 2019. After 27 years with Principal, current president of  retirement income and solutions (and chairman of Principal Funds) Nora Everett, announced her intentions to retire at the end of March 2019.

Schaaf has a long tenure at Principal and has played several key leadership roles across the organization, including roles in the retirement income and solutions area. From 2000 to 2008, she held various leadership positions in marketing and strategy, with a focus on mid-sized retirement plan business. She also served as vice president of national accounts in the health division prior to moving to Principal International to lead strategic planning and business development. 

Schaaf’s successor within Principal International will be shared in early 2019.

Alternative Investment Executives Join Wilshire

Wilshire Associates announced that Jessica Nicosia and Cian Desmond have joined Wilshire Funds Management as vice president and assistant vice president, respectively. Nicosia will assist in developing Wilshire’s robust alternatives offering, supporting the firm’s efforts to identify and provide customized alternative investment solutions to financial intermediaries and institutions globally. Desmond joins Wilshire’s Manager Research Group, primarily focused on alternative investment strategies. 

Nicosia brings to Wilshire 15 years of experience in the alternative investment industry. Prior to joining Wilshire Associates, she held roles with a focus on marketing quantitative hedge funds at R.G. Niederhoffer Capital Management, Vegasoul and J. E. Moody & Company.

Desmond brings eight years of industry experience. Prior to joining Wilshire Associates, he was the director of alternative investment research at Shepherd Kaplan Krochuk LLC in Boston, with primary responsibility for developing investment strategy, conducting alternative investment research, and leading manager selection across asset classes. Prior to relocating to Boston, he worked in the alternative investment research group at Canterbury Consulting.

Nicosia will be based in New York, while Desmond will be based in Santa Monica.  

Data Analysis Expert Heads to EBRI Research Team

EBRI has added Zahra Ebrahimi to its research staff. Ebrahimi recently earned her Ph.D. in economics from Stony Brook University in New York, and has a background in data analysis and labor economics. 

According to Jack VanDerhei, research director, Ebrahimi’s primary focus will be concentrated on conducting and interpreting research related to labor market and spending behavior of the elderly, using the Health and Retirement Study (HRS) dataset. Ebrahimi will also provide perspectives and analysis for EBRI’s Financial Wellbeing Research Center. 

Ebrahimi will be based at EBRI’s headquarters in Washington, D.C.

Robeco B.V. Selects New CCO and Legal Leader

Robeco B.V. has appointed Kevin Murphy as chief compliance officer and head of legal within Robeco Institutional Asset Management U.S. Inc. In this position, Murphy is responsible for developing and implementing a scalable legal and compliance infrastructure to service institutional clients across the U.S. and Canada. He brings extensive legal and compliance experience gained from nearly two decades working in the global investment management industry. 

Prior to joining Robeco U.S., Murphy was senior vice president and chief compliance officer at Itau USA Asset Management Inc. Prior to that, Murphy served as vice president and compliance director of J.P. Morgan Chase. Before his time at J.P. Morgan, Murphy was a founder and principal at KBM Consulting, serving as a compliance consultant to firms such as Prudential Investment Management and Horizon Asset Management. He has also held compliance roles at GLG Inc. and Allianz Global Investors of America.

Murphy began his career in the investment advisory industry as assistant vice president, counsel, at Pershing LLC. He earned his J.D. from the University of Notre Dame Law School.

Administration November 30, 2018

Strategies for DC Plans to Mitigate Risks in 2019

Willis Towers Watson offers nine actions for DC plan sponsors to mitigate risks in 2019.

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In a new white paper, Willis Towers Watson (WTW) outlines nine steps plan sponsors can take to mitigate risks in defined contribution (DC) plans in the coming year.

The first risk, according to WTW, is “workforce risk.” The company’s 2017 Global Benefits Attitudes Survey found that half of those age 50 and older plan to work past the typical retirement age. “Employees who want to retire but are not financially prepared can create the risk of a disengaged workforce and contribute to blocked career paths.”

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WTW says sponsors should identify those participants who are not on track for a successful retirement at the traditional age and develop a more effective plan strategy that fosters retirement readiness.

The second major risk DC plans continue to face is “litigation risk,” WTW says. Lawsuits continue to be filed against plan fiduciaries specifically in the areas of investment offerings, plan-related participant fees and company stock.

WTW says sponsors should ensure that their fiduciary committees have the appropriate people sitting on them and that the committees are structured properly. They should also ensure that the committee is updating and following internal governance policies for evaluating investment lineups, reviewing fees and executing best practices to document their decisions. According to the firm, strong governance also relies on outside experts such as ERISA [Employee Retirement Income Security Act] attorneys and consultants for guidance on evolving regulations in an effort to minimize litigation risk.

Third, sponsors should work to minimize “talent risk.” This means, WTW says, ensuring that their DC plans are competitive enough to attract and retain key talent. The solution here, according to WTW, starts with regularly conducted benchmarks and an eye to the evolving needs of a company’s workforce. Willis Towers Watson research shows that key areas of focus among employers who have recently made benefit changes include improving personalized communication, enhancing technology to administer benefits and promoting employee wellness. 

Next up is “distraction risk.” WTW notes that most committee members can spend only 5% of their time on plan management issues, which the firm says is “not enough time for even the most basic review of a DC plan, its operations and its results.” Since making investment decisions about a plan’s lineup is so critical, WTW says sponsors should either delegate these decisions to a specialized internal subcommittee or hire an outsourced chief investment officer (OCIO).

The fifth risk is “compliance risk.” Many sponsors rely on several outsourced experts to assist them with plan documents, administration, recordkeeping and more—making it difficult for the sponsor to have a bird’s eye view of how their plan is running. WTW says the solution is for plan sponsors to hire seasoned experts to conduct periodic compliance reviews. “Both one-time and ongoing reviews are key drivers of long-term success and can save sponsors from IRS and Department of Labor penalties, unnecessary vendor expenses and negative publicity.”

The sixth area WTW calls out is “investment risk.” Many participants, left to their own devices, are challenged to select a diversified portfolio or a target-date fund. “This risk is particularly concerning when you consider how many workers today lack even a basic level of financial literacy,” WTW says. The solution is for plan sponsors to reevaluate automatic enrollment and qualified default investment alternatives (QDIA), perhaps selecting a custom target-date fund (TDF), according to the firm. 

Sponsors are, of course, very familiar with “savings risk,” whereby so many workers are unsure of how much to save—and many are not saving enough.

WTW says sponsors should strongly consider automatic enrollment, re-enrollment and auto-escalation. Although the paper does not mention the benefits of increasing the initial deferral rate, the cap on escalation and the company match, these are all obvious considerations. WTW also says that financial wellness programs and support for employees with paying down student debt are other programs to weigh.

The eighth risk that WTW underscores is “tax risk.” WTW notes that few participants take advantage of Roth 401(k), individual retirement accounts (IRAs) or health savings accounts (HSAs).

“Committees should consider adopting default options into Roth structures or promoting the use of HSAs to cover medical expenses or provide income during retirement,” WTW suggests.

Finally, WTW points to “longevity risk,” the possibility of participants outliving their savings. Sponsors should consider offering annuities, explaining retirement income strategies and/or education about how to maximize Social Security benefits.

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