Deals & People November 11, 2016

Retirement Industry People Moves

Voya Expands Retirement Business; First Eagle’s Retirement Investment Solutions Group Takes Flight; Wagner Law Group Adds Partner; WealthPLAN Partners Announces New B/D and Custodian Relationships; and more.
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Voya Expands Retirement Business

Michael De Feo has been hired as head of retirement and investment-only business by Voya Investment Management. He will report to Jake Tuzza, head of intermediary distribution for Voya Investment Management.

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“Mike will oversee, and be responsible for, all aspects of our partnership with Voya’s retirement business, third-party defined contribution investment only (DCIO) efforts, sub-advisory, and working with our institutional team to help grow our DCIO business,” says Tuzza. “Under Mike’s guidance, we will strengthen our focus on retirement, centralize our efforts in support of defined contribution and, together with our affiliates, accelerate our desire to be recognized as the retirement asset manager of choice.”

Before joining Voya, De Feo worked with Nuveen Investments. He served as managing director for DCIO, strategic alliances and sub-advised business. He was responsible for managing marketing, sales and key account functions.

“Mike has a long track record of success in the defined contribution (DC) investment arena—building strong relationships with key record-keepers and broker-dealers, and using value-add programs to help grow sales and assets under management,” says Tuzza.

De Feo earned a bachelor’s degree in history from Roanoke College.

NEXT: First Eagle’s Retirement Investment Solutions Group Takes Flight

First Eagle Reveals Retirement Investment Solutions Group

First Eagle Investment Management has launched the Retirement Investment Solutions Group with new hire Michael Rosenberg as the head. The group will bring together financial advisers, investment consultants, and retirement plan recordkeepers to deliver investment solutions to plan sponsors, plan participants and individual retirement savers. It will meet this task while working closely with the firm’s retail and institutional distribution teams.

Leading the initiative, Rosenberg will draw from his experiences with Prudential Investments, where he served as executive vice president and director of investment-only defined contribution. He was responsible for sales to plan sponsors, consultants, intermediaries and retirement platforms. Prior to joining Prudential in 2007, Rosenberg spent nine years with Goldman Sachs Asset Management, where he was director of retirement services. He also spent 11 years marketing retirement plan services at ABN AMRO.

“I’m delighted to be joining First Eagle, where I’ve been impressed not just by the talent and track record of the investment teams, but equally by the deep commitment to clients that permeates the entire organization,” says Rosenberg. “First Eagle has both the ability and the drive to help retirement savers meet their goals.”

First Eagle is an independent investment management firm with a focus on active, fundamental and benchmark-agnostic investing, with a strong focus on downside protection. First Eagle’s investment capabilities include equity, fixed income and multi-asset strategies.

NEXT: Wagner Law Group Adds Partner

Wagner Law Group Adds Partner

The Wagner Law Group, one of the nation’s top ERISA employee-benefits firms, has hired David Pickle as a partner.

Pickle’s work has focused on various aspects of ERISA Title I provisions including prohibited transactions and exemptions, as well as reporting and disclosure rules. He has specialized in advising clients with respect to investment management services, investment transactions, mergers and acquisitions, and Department of Labor (DOL) investigations. His clients have also include plan sponsors and investment-related service providers. He’s formerly a partner at the law firm of K & L Gates.

Pickle also taught a graduate level course on ERISA fiduciary rules as an adjunct professor at Georgetown University Law Center. He received an AB from Carleton College and JD from University of Kansas School of Law, where he also served as a note and comment editor for the Kansas Law Review.

NEXT: Verit Advisors Hires New Associate

Verit Advisors Hires New Associate

Kelsey Neal has joined Verit Advisors as an associate in its Chicago office. Neal will contribute to Verit’s conversion and transaction execution team with an emphasis on mergers and acquisitions, ESOP advisory, and valuation services.

Prior to joining Verit, Neal worked at Robert W. Baird & Co., where he served as a member of Baird’s investment banking division within the Technology & Services Group. He focused on merger/acquisitions and capital-raising transactions. Neal graduated from Washington University in St. Louis, where he received a bachelor’s degree in economics along with a second major in finance.

Verit also announced that Jake Cravens has been promoted to associate. Cravens joined Verit in 2015 as an analyst.

Verit Advisors combines middle-market investment banking capabilities, ESOP services, debt capital market support, mergers and acquisitions, valuation services and board advisory expertise.

NEXT: LGIM Expands Leadership Roles

LGIM Expands Leadership Roles

Legal & General Investment Management (LGIM) has announced the appointment of Anton Eser as chief investment officer and Aaron Meder as CEO of Legal & General Investment Management America (LGIMA).   

Meder will transition into the role in the next few months and will be based in Chicago. He joined the firm in 2010. Later, he was promoted to serve as head of investments. 

Eser is currently co-head of LGIM’s global fixed-income business and he will succeed Meder after he takes on his new position in Chicago. Eser joined LGIM in 2006, and has played a key role in expanding its fixed income offering with a team of more than 70 investment professionals.

Colin Reedie, currently head of euro credit business, will replace Eser as co-head of global fixed income, alongside John Bender, also CIO of U.S. fixed income.

John Bender has been acting as interim CEO of LGIMA since the departure of Robert Moore in September this year. 

NEXT: WealthPLAN Partners Announces New B/D and Custodian Relationships

WealthPLAN Partners Announces New B/D and Custodian Relationships

WealthPLAN Partners announced a new broker-dealer relationship with Securities America and new custodian relationships with Charles Schwab, TD Ameritrade and Fidelity.

Prior to partnering with Securities America, WealthPLAN Partners had worked with LPL Financial for 27 years.

The new agreements are effective as of November 3, 2016. WealthPLAN Partners provides financial advisers a hybrid RIA model with a suite of services to support their independent offices. The firm cuurrently represents 28 advisers with assets under management of more than $2.2 billion.

“Our decision to establish new broker-dealer and custodian relationships is with the future success of our advisers in mind,” says Brent O’Mara, co-founder of WealthPLAN Partners. “Given the changing industry landscape, we felt this new structure allows our firm to remain a true hybrid RIA, which we believe is the best platform for independent financial advisers. This new solution provides advisers the support and services they need, while allowing them to maintain their independence and autonomy.”

WealthPLAN Partners will begin work immediately with its partner advisers to transition to the new broker-dealer platform. The firm provides an array of services for independent advisers looking to increase practice performance by leveraging technologies and industry advancements. Through WealthPLAN Partners’ Advisor Management Portal (AMP), powered by a group of advisory technology firms Orion, Salesforce, AdvisoryWorld and eMoney, advisers can access their choice of automated processes for branded performance reports and proposal generation, investment models, operational workflows, marketing, social media and more.

The firm also offers fee-based retirement plan options designed to help advisers adhere to the Department of Labor’s (DOL)’s increasingvfiduciary responsibilities for both advisers and plan sponsors.

“We are extremely pleased to begin working with Securities America and our new custodians and look forward to leveraging these relationships to better serve our partner advisers,” says Todd Feltz, president, CEO and co-founder of WealthPLAN Partners. “We see many tangible benefits from the new relationships, including the switch to a custodian agnostic platform, which will provide savings for current advisers and clients.”

To learn more about WealthPLAN Partner’s solutions for independent advisers, contact Philip Bland, director of Business Development, at phil@joinwpp.com or (303) 532-7626.

Compliance November 11, 2016

Financial Engines and Xerox Questioned in ERISA Suit

The latest ERISA lawsuit to be filed targets Xerox and Financial Engines for advice arrangements negotiated between the firms and several Ford Motor Company retirement plans. 
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Participants seeking to certify a class action lawsuit on behalf of three Ford Motor Company retirement plans say Xerox HR Solutions permitted excessive fees to be assessed on participant accounts, in violation of the ERISA fiduciary duty.

The text of the complaint shows the three Ford Motor Company’s retirement plans are fairly standard in their construction—with an employer contribution-only component tied to a traditional plan for salaried employees and another specifically designed for hourly employees—utilizing a master trust to permit the commingling of assets for investment and administrative purposes.

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The master trust, in turn, provides for several individual investment options, and the Ford plans give individual participants the ability to choose among various investment options. As of December 31, 2015, the net assets in the trust totaled $13.94 billion, with the vast majority of the money allocated to the plans permitting employee contributions.

The defendant Xerox provides platform and recordkeeping services to the master trust for the administration of the Ford plans, plaintiffs explain. Financial Engines Inc. (FE), not actually named as a defendant but factoring significantly into the complaint, is described as providing optional advisory services that participants can access if they chose—an arrangement that is not viewed as inherently problematic by plaintiffs.

“FE and Xerox HR were not content, however, with merely providing participants with access to FE’s services,” the compliant states. “Xerox HR wanted a piece of FE’s action, and saw an opportunity to take a percentage of the account of every participant choosing to use FE’s services, in addition to the fees Xerox HR was collecting for recordkeeping.”

NEXT: Details from the text of the complaint 

Accordingly, in order to be included as the investment advice service provider on Xerox HR’s platform, plaintiffs suggest FE inappropriately agreed to pay—and is paying—Xerox HR a significant percentage of the fees it collects from Ford’s 401(k) plan investors.

“For its part, FE was interested in securing an arrangement with Xerox HR to be the exclusive provider of investment advice to participants in retirement plans administered on Xerox HR’s platform, and was willing to charge excessive fees to plaintiffs and other participants in order to meet Xerox HR’s demand for a kickback,” the complaint continues.

Plaintiffs argue these fees are not being paid for any substantial services being provided by Xerox HR to FE or to participants of the plans. While the fees are “being paid ostensibly for ‘data connectivity services’ as described in the Annual Return of the Master Trust filed with the EBSA on Form 5500,” plaintiffs argue they are in reality “being paid as part of a so-called ‘pay-to-play’ arrangement; better described in the pejorative as a kickback.”

The plaintiffs ask the court for relief, arguing the arrangement wrongfully inflates the price of FE’s professional investment advice services that are, by all accounts, critical to the successful management of workers’ retirement savings.

Specifically, plaintiffs argue Xerox and FE are in violation of the Employee Retirement Income Security Act (ERISA) fiduciary responsibility and prohibited transaction rules under sections 404, 405 and 406.

NEXT: Digging into the allegations 

Irrespective of how the matter proceeds, the text of the complaint offers some interesting insights into the way Ford, Xerox and FE negotiated various service arrangements throughout the years.

Back in 2011, according to the complaint, Ford initially negotiated a “professional management fee” with FE as a percentage of the value of a participant’s account invested through FE—at a rate of 45 basis points for the first $100,000 invested; 35 basis points for the next $150,000 invested; and 20 basis points for amounts in excess of $250,000 invested.

The complaint goes on to cite FE’s Form 10-K filing for fiscal year 2015, which states with regard to the arrangement with Xerox HR: ”In these relationships, we are the primary adviser and a plan fiduciary. Data is shared between the plan providers and us via data connections. In addition, our sales teams directly engage plan sponsors, although, in some cases, we have formed and are executing a joint sales and collaborative marketing strategy with the plan provider. We have separate contracts with both the plan sponsor and plan provider, and pay fees to the plan provider for facilitating the exchange of plan and plan participant data as well as implementing our transaction instructions for member accounts.”

Plaintiffs argue it is improper for FE to be making these payments to the plan provider because the practical effect is that FE is “paying to play” and ends up participants charging more than reasonable or necessary for advisory services. 

“On information and belief, FE is paying Xerox HR over 30% of the fees it receives from the Ford Plans,” plaintiffs state. “For example, according to the Master Trust’s 2015 Form 5500 Filing Schedule C, the Ford Plans paid FE $5.79 Million, and FE paid $1.84 Million of this amount back to Xerox HR, purportedly for “Data Connectivity Services.” On a relative value basis, Xerox HR’s fee for whatever service, if any, it actually provides with respect to participants’ use of FE’s service is plainly unreasonable.”

The full text of the complaint is here. 

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