Russell Picks DC Advisory Director

Andrew Scherer was appointed director of defined contribution (DC) intermediary distribution for Russell Investments’ U.S. adviser-sold business.

Scherer’s team delivers retirement plan insights and solutions, such as mutual funds and other multi-asset solutions, to DC recordkeeping platforms, retirement plan sponsors and retirement plan advisers.

Scherer joined Russell in March, bringing 28 years of experience in financial services. He is based in the firm’s Chicago office and reports to Michael Winnick, managing director of U.S. sales and partnerships for the adviser-sold business. 

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One of Scherer’s tasks will be continuing to build momentum in Russell’s defined contribution investment-only (DCIO) business. He will focus on managing relationships with DC recordkeeping platforms, and lead the team that works with Russell’s sales and service teams to deliver DCIO solutions to retirement plan intermediaries and strategic distribution partners.

Scherer and the DCIO team also will work closely with Russell’s institutional DC group, led by Dick Davies, to deliver institutional quality solutions to plan advisers, plan sponsors and their participants, as well as Russell’s perspectives on plan design, investments and implementation.

Before joining Russell, Scherer was a national sales director at Invesco, and also served as a managing director at Morgan Stanley and Van Kampen. Scherer launched and expanded Van Kampen’s DCIO business and later took on leadership of Morgan Stanley’s DC, variable annuity, managed accounts, registered investment adviser and Latin American businesses.

Russell Investments is a global asset manager with assets of more than $24 billion under management and assets of more than $117 billion under advisement in its DC business.

Size Matters When Using an Adviser in Rollovers

When making a decision about plan assets, nearly half of retirees and pre-retirees (41%) consult a financial adviser, research found.

The options are finite—leave the money in the plan, roll it over, cash out, initiate installment or annuity payments or transfer to a new employer’s plan—but the assets can be a substantial portion of an individual’s savings.

According to LIMRA’s study, “Asset Retention: Keys to Success in the Rollover Market – 2012 Results,” the size of the account balance directly influences whether an individual chooses to work with an adviser.

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Advisers are almost twice as likely to play some role in this decision when the account balance is at least $100,000. Forty-four percent of plan participants with that amount choose to work with an adviser versus 23% of plan participants who have under $100,000.

Balance size dictates in part what can be done with the money, and how these decisions are made. Smaller balances make individuals less inclined to use the services of an adviser because of the associated fees, according to Raymond Nelson, a financial adviser with MetLife. “You can’t have a wrap account if it’s less than $50,000,” Nelson told PLANADVISER. “Even under $100,000, if they put it into an annuity, they can lock in gains and guarantees from a pension standpoint by protecting the balance from the fluctuations of the market.”

 

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Leaving money in the plan can be an attractive option for those with larger balances. “Individuals with balances of more than $100,000 can retain greater access to more products by leaving their money in the plan,” Nelson said. And plan sponsors want to keep the money in the plan, he pointed out, unless the balance is a smaller one, because of the associated management fees.

Most often, an adviser assists with both the decision-making and the actual transactions among individuals with substantial account balances, according to Matthew Drinkwater, associate managing director of LIMRA Retirement Research and the author of the study. “By definition, there is more at stake,” Drinkwater told PLANADVISER.

Of those people who choose to roll over a defined contribution (DC) plan balance into an individual retirement account (IRA), more than half of respondents (57%) consult an adviser, the study found. Slightly more than half the time (53%) participants choose to work with an adviser to complete the rollover. Drinkwater noted that money is more likely to leave the plan provider when retirees and pre-retirees rely on an adviser.

 

 

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The exception is when the adviser actually works for the plan provider, Drinkwater said. “In that case, advisers are partners in keeping the assets within the enterprise, either staying in the plan or rolling to an IRA offered by the plan provider,” he said. These advisers are more likely to initiate contact with the plan participant, which suggests that in these cases, advisers receive referrals from the plan provider.

“Our research shows that these advisers tend to know more about the specific features and benefits of the DC plan,” Drinkwater said. “But most of the time, the adviser has no affiliation with the plan provider, so in most cases, we see people rolling out their money.”

“As people become more familiar with rollovers, or if they receive clearer statements of their distribution options, they may be less likely to rely on a professional to execute the decision, possibly relying more on call center reps or doing it online themselves,” Drinkwater said. “But I still think people will still seek help from professionals when sorting through the various options available and selecting the one that makes the most sense for them.”

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