Benefits December 14, 2018

Survey Data Shows Disparate Opinions of In-Plan Retirement Income

Survey data demonstrates asset managers, recordkeepers, consultants and plan sponsors talk past each other regarding retirement income solutions, Cerulli says.

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According to the fourth quarter 2018 issue of The Cerulli Edge—U.S. Retirement Edition, there is a disparity in the way different retirement industry stakeholders think about the prospect of offering participants greater access to in-plan retirement income products.

Notably, Cerulli finds 401(k) plan sponsor survey data shows that plan sponsors are not necessarily thinking strictly about annuities when contemplating the addition of an in-plan retirement income options. Despite this, recordkeepers most commonly point to an annuity-based product as being top-of-mind for plan sponsor clients.

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According to the report, while defined contribution plan sponsor implementation of in-plan retirement income solutions remains low, Cerulli observed “a reinvigoration of the subject in 2018.” With this renewed focus, defined contribution investment-only (DCIO) product managers are getting more involved in discussions about new in-plan income opportunities.

“This shift involves plan sponsors proactively inquiring as to how the DCIO’s in-plan retirement income solution is structured and implemented,” Cerulli says. “This inquiry contrasts with prior years in which DCIOs described discussions with plan sponsors on lifetime income solutions that were either politely listened to without any follow-up or rebuffed outright.”

Based on a previous Cerulli survey of 41 DCIO asset managers representing greater than $3.8 trillion in DCIO assets, close to half (41%) currently offer an in-plan retirement income product and another 10% are considering adding one. For the 41% of DCIOs that currently offer an in-plan retirement income product, Cerulli says, target-date funds are the most common structure.

Cerulli contends that inclusion of a guaranteed component is “not a prerequisite for an effective retirement income product.” But at the same time, a basic asset-allocation shift to more conservative investments “may not be enough to address the diverse financial situations of investors near or at retirement age.”

According to Cerulli data generated in 2017, close to 13% of plan sponsors surveyed responded that they expected to add or were considering adding a retirement income solution to the plan menu in 2018. Cerulli then asked this cohort of plan sponsors to identify what type of product they were considering as an in-plan retirement income solution.

“This data demonstrates that the financial services community, including asset managers, recordkeepers, consultants, and plan sponsors, talk past each other regarding retirement income solutions,” Cerulli says. “For example, close to one-fourth (24.5%) of 401(k) plan sponsors considering adding a retirement income solution identify a broad-based fixed-income strategy in a mutual fund vehicle as the strategy they would be most likely to offer participants. In contrast, an asset manager is highly unlikely to consider this an appropriate retirement income solution—the same can be said for the nearly 13% of plan sponsors that select a dividend-paying mutual fund as a retirement income solution.”

According to Cerulli, the data begs the question, “What exactly do you mean by retirement income strategy?” Cerulli believes that, for the DC industry to make meaningful progress in positioning DC plans as a retirement income platform, “all players need to speak the same language.”

More information about obtaining Cerulli research reports is available here.

Deals and People December 14, 2018

Retirement Industry People Moves

Stadion adds marketing VP to Maine office; TRA acquires Tennessee TPA firm; Marketing strategist joins Custodia; and more.

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Stadion Adds Marketing VP to Maine Office

Stadion Money Management has appointed Lucy Pelsma as vice president, marketing.

Pelsma will focus on marketing strategy for Stadion’s independent recordkeepers and the development of outreach strategies for Stadion’s retirement solutions. She is based in Maine and reports to Holly MacMillan, chief marketing officer.

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“Through our recordkeeping partners, we’re seeing increased demand for our retirement managed accounts nationwide, which further highlights the need for partner specific marketing strategies,” MacMillan says.

Before joining Stadion, Pelsma served as principal, institutional product and marketing at Financial Engines, with responsibility for developing and managing key relationships with recordkeepers and financial advisers. She created and implemented marketing initiatives designed to generate new business activity. 

Pelsma has more than two decades of financial services experience, including a role with Bain Capital affiliate Sankaty Advisors as senior associate, investor relations. She also worked for Bank of New York Mellon as assistant portfolio manager. Pelsma received her bachelor’s degree in economics from Wheaton College and her master’s degree from Boston College.

TRA Acquires Tennessee TPA Firm

The Retirement Advantage Inc. (TRA) has acquired The Condon Company (TCC), a third-party administration (TPA) firm headquartered in Memphis, Tennessee.

With the acquisition of TCC on November 30, TRA now has retirement plan professionals in 32 states to support its national base of clients, financial advisers and recordkeeping partners with customized retirement plan design, administration, consulting and fiduciary solutions.

“We are excited about joining forces with TRA and leveraging their scale and diverse suite of products and services to offer our clients and partners,” says Mike Condon, president of TCC. “

TRA president Matt Schoneman says the move significantly expands the firm’s our geographic reach and creates new opportunity in Tennessee and the surrounding states.

“Over the past year TRA has successfully integrated Actuarial Consulting Services, Applied Plan Administrators and Markley Actuarial Services, making The Condon Company the fourth to join forces with us in 2018,” Schoneman adds. 

Former Marketing Strategist Joins Custodia

Custodia Financial has hired Aaron Tabela as chief marketing officer. In his new role, Tabela will be responsible for driving awareness of 401(k) loan defaults as a critical financial wellness and fiduciary challenge, while positioning RLE in the institutional retirement marketplace.

Tabela comes to Custodia from Financial Engines. As Financial Engines’ head of workplace marketing, he led a team of institutional and participant marketers that developed and executed the firm’s marketing strategy for employers, employees, retirement plan providers, consultants and advisers. Prior to Financial Engines, Tabela led marketing strategy for TIAA’s large plan market segment. 

In his new role, Tabela will work closely with fellow Financial Engines alumnus Rennie Worsfold, who joined Custodia Financial last April as executive vice president of distribution. 

Transamerica Hires Client Engagement Director for Midsize Plans

Craig Haase has joined Transamerica as director of client engagement for retirement plans.  He will report to M. Palmer Whitney, senior director of client engagement, workplace solutions.

Haase will oversee client management for midsize retirement plans and special markets, including multiple employer plans. Among his many duties, he will be focusing on plan sponsor client satisfaction, using customer feedback to identify new opportunities, and supporting Transamerica’s modernization initiatives.

With more than 20 years in the retirement plan industry, Haase brings extensive experience in developing, implementing, and improving retirement plans of all sizes. Haase earned his bachelor’s degree from the University of Connecticut.

Investment Consulting Firm Promotes Past Project Analyst

DeMarche has promoted Mark Andes to assistant portfolio manager of Discretionary Management Services (DMS), DeMarche’s discretionary OCIO affiliate. He will immediately join the existing team of portfolio managers.  The investment team is responsible for implementing client policies, ongoing manager due diligence and manager selection, tactical allocation, rebalancing, economic research and market outlook strategies. 

Andes joined DeMarche in 2005 as a project analyst. He has held a series of roles with increasing responsibility and has provided key leadership for the company’s research efforts. Currently, Andes serves as a member on both the traditional and alternative manager review committees, co-manager of investment manager research, and supervisor of project analysts. He has also led discretionary operations as DMS administrator since 2006.

Andes earned his bachelor’s degree in business administration from Southwest Baptist University and will sit for the Chartered Alternative Investment Analyst (CAIA) exam in early 2019.

Andes will continue in his account manager and consultant roles for those clients he already serves. His promotion does not change any current client’s service team or their responsibilities.

Ameritas Grows Retirement Plans Division with New Member

Chief Executive Officer JoAnn Martin has announced that Forrest Wilson has joined the retirement plans division of Ameritas.

In this role, Wilson will be responsible for leading sales and distribution for the division.

“Forrest will help the Ameritas retirement plans division achieve fast growth with an eye toward enhancing the client, adviser, and third-party administrator [TPA] experience,” says Jim Kais, Ameritas senior vice president, retirement plans.

Wilson’s experience includes service, operations, sales and management on both the platform and investment sides of the business.

Wilson earned a bachelor’s degree in marketing from Central Connecticut State University and a master’s degree in finance and economics from New York University’s Stern School of Business. He holds the FINRA Series 7, 24 and 63 securities licenses.

Lincoln Financial Group Names New General Counsel

Lincoln Financial Group has named Leon Roday executive vice president and general counsel.

In his new role, Roday will oversee all activities for the legal, compliance, government relations and corporate secretary functions of the company, as well as provide strategic counsel to the CEO, senior management team and board of directors. He will report directly to Dennis R. Glass, president and CEO, and will sit on the company’s senior management committee.

Most recently, Roday worked for Genworth Financial and GE Financial Assurance, where he served as general counsel, executive vice president and secretary to the board for nearly 20 years. Prior to that, he was a partner with LeBoeuf, Lamb, Greene and McCrae LLP. He began his legal career as an intern for both the Securities and Exchange Commission and the United States Attorney’s Office.

Roday earned his J.D. from Brooklyn Law School and a bachelor’s of arts from the University of California at Santa Barbara. He was a past chair of the Insurance Marketplace Standards Association, sat on the board of the Association of Life Insurance Counsel, and currently sits on the board of the Genworth Mortgage Insurance Corporation Canada.

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