Data & Research October 17, 2014

Higher Education Plan Sponsors Turning to Advisers for Help

The use of consultants and advisers by retirement plan sponsors in the higher education market has almost tripled since 2010, with 90% of respondents to a survey by Cammack Retirement Group utilizing some type of adviser.
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Michael Volo, senior partner with Cammack Retirement Group in Wellesley, Massachusetts, tells PLANADVISER he thinks this is one of the reasons higher education plan sponsors are more focused on fees, simplifying plan administration and engaging participants (see “Higher Education Plan Sponsors Step Up Their Game”). Fifty-nine percent of institutions polled for the fourth edition of the Higher Education Retirement Plan Survey report using a consultant, half use an attorney and 38% use a registered investment adviser to help them with running their plans.

The biggest reasons for hiring an adviser, cited by respondents, were heightened fiduciary concerns and changes in the legal/regulatory environment (each selected by 73% of respondents). Two-thirds (65%) of respondents say they meet with their advisers quarterly, and 44% of respondents said their adviser acts as a plan fiduciary, up from 25% in 2010.

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Responsibilities advisers help higher education institutions with include:

  • Ongoing investment monitoring – 77%;
  • Plan compliance – 73%;
  • Development of Investment Policy Statement (IPS) – 67%;
  • Investment selection – 56%;
  • Plan design – 51%;
  • Vendor selection – 36%;
  • On-site participant education/communication – 23%; and
  • Other tasks – 5%.

While higher education institutions are adopting many industry best practices, the survey uncovered areas in which they could improve, such as increasing voluntary plan participation and limiting loan usage by participants. In addition, investment policy statements (IPS) are utilized by only 60% of fiduciary committees.

Eighty-four percent of respondents said a key initiative in the upcoming year will be to improve employee education. Other key initiatives for the upcoming year cited by respondents included changing the number of investment options in their plans (42%), creating an IPS (33%), and establishing a fiduciary due diligence process (24%).

“What we’ve seen through the survey and working with academic and research institutions, is there’s a level of complexity and difference in the higher education 403(b) market that should be recognized and understood. It is very different from 401(k)s,” Volo notes.

He says Cammack only provides the complete survey results to survey participants. 

Deals & People October 16, 2014

LGIMA Announces Series of Senior Hires

Legal & General Investment Management America, Inc. (LGIMA) announced that it has hired four executives to support its expanding liability-driven investing (LDI) business.
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Matthew Cohen, Shawn Fan, Ciaran Carr, and Jeff Eberhardt are joining the Chicago-based registered investment adviser’s LDI business. LGIMA specializes in fixed-income strategies with an emphasis on LDI and de-risking solutions. 

“Our LDI business in the U.S. continues to grow, both in number of clients and in range of solutions offered,” says Jodan Ledford, head of U.S. solutions for LGIMA. “To support this demand from our expanding roster of defined benefit pension plan clients, we are committed to recruiting the most talented executives in the industry.”

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Cohen joins as an LDI portfolio manager and is responsible for the day-to-day management and risk oversight of the firm’s LDI portfolios. Previously, Cohen was with Barclays Capital, serving as an associate vice president on the fixed-income interest rate options trading desk.

Fan will fulfill the position of senior quantitative analyst, working closely with the portfolio management team to deliver proprietary risk management tools for use in LDI portfolios. Before accepting the new position he was a director at the Chicago Mercantile Exchange (CME) Group and led a team that developed and enhanced quantitative analytics and architecture design for margin production systems.

Carr will be joining LGIMA as a solutions strategist in February 2015. His responsibilities include developing and structuring pension risk management solutions. He is currently with LGIMA’s London-based affiliate, Legal & General Investment Management (LGIM).

Eberhardt will serve as senior client relationship manager, with a focus on customized mandates. He was previously a vice president at Ansley Capital Group, a healthcare-focused boutique investment bank. Eberhardt also worked at Deutsche Bank and Wachovia Securities earlier in his career. He has an extensive background in originating, structuring, and trading credit derivatives, LGIMA says.

Cohen, Fan, and Carr will report directly to Ledford, and Eberhardt will report to Nancy Johnson, head of client relationships for LGIMA. “Each brings with them the experience to help continue to drive this business forward and fortify our position as a leading provider of LDI solutions for the U.S. market,” Ledford says.

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