Products August 15, 2016

Vanare Teams With Redtail to Streamline Account Opening Process

The integration pairs a “fully customizable robo-adviser and account opening platform” with an “industry-leading CRM,” according to the firms. 
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Vanare, a wealth management technology platform provider, and Redtail Technology, provider of client relationship management (CRM) solutions for financial services firms, together launched an integration effort that will allow Vanare users to sync client contact information directly from their Redtail CRM.  

The integration is available through Vanare’s NestEgg, described as a white-labeled robo-adviser platform that “digitizes a firm’s investment philosophy,” and Spark, Vanare’s online account opening platform, “which helps advisers jumpstart relationships with a fast, intuitive and straight-through online account opening workflow.”

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Rich Cancro, founder and CEO of Vanare, observes that advisers are under increasing pressure to deliver immediate value to new clients. “Since the first key interaction with an investment advisory firm is the client onboarding process, we believe a smooth technology experience when opening and funding new accounts creates a very critical first impression regarding the adviser’s level of service and professionalism,” he explains.

According to the firms, this first phase of the Redtail integration, which is now available, will streamline the data sharing process to ensure all client contact information input during the onboarding process flows directly to the adviser’s Redtail CRM database. The following phases are set to launch in the fall of 2016 and will offer “two-way data sharing functions, allowing advisers to sync client activity and status reports.”

“In order to best serve individuals across all generations and asset levels, clients can open accounts online through their adviser’s digital advice offering, or advisers can digitally onboard clients for their traditional adviser-led investment programs through the Vanare platform,” the firms note. “From the moment the client onboarding process begins, clients, advisers and their support staff will know the real-time status of the account, with straight through processing to the custodian.”

Advisers and financial services firms interested in learning more should contact info@vanare.com.  

Compliance August 15, 2016

Four Other 403(b) Plan Excessive Fee Suits Filed

All lawsuits accuse major universities of not using their bargaining power to get lower fees for recordkeeping and investments.
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Excessive fee lawsuits have been filed against 403(b) plans of Emory University, the University of Pennsylvania, Johns Hopkins University and Vanderbilt University.

The complaints are nearly identical to those filed against MIT, New York University, Yale and Duke University, alleging that instead of using the plans’ bargaining power to benefit participants and beneficiaries, the defendants allowed unreasonable expenses to be charged to participants for administration of the plans, and retained high-cost and poor-performing investments compared to available alternatives. And, the suits call out the traditional 403(b) plan model of offering multiple funds (fund lineups of the plans in the suit ranged from 78 to more than 400), including individual annuities, and using multiple recordkeepers.

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The cases accuse the plans of not performing a competitive bidding process to consolidate recordkeepers and/or negotiate better recordkeeping fees. They also allege the plans used revenue-sharing.

However, in the case of Henderson v. Emory University, Mary L. Cahill, the current vice president of Investments and chief investment officer of the university is singled out as a defendant. Cahill is responsible for approving investment selections for the Emory University Retirement Plan and the Emory Healthcare, Inc. Retirement Savings and Matching Plan as recommended by Emory Investment Management. The case seems to say that Cahill should have known better than approving so many investments and expensive investments, noting that before joining Emory, she was deputy chief investment officer at Xerox Corporation where she was responsible for developing, recommending and implementing investment alternatives for Xerox’s $12 billion in defined benefit and defined contribution plan assets.

The lawsuit also notes that, in contrast to the administration of the other plans, the Emory Clinic, Inc. Retirement Savings Plan—a 403(b) plan with only $310.4 million in assets and 2,231 participants has a single recordkeeper and invested in lower-cost share classes than the other plans for many of the same mutual fund options offered to participants.

In addition, the Emory complaint says defendants allowed participants to be charged asset-based fees for recordkeeping, instead of flat per-participant rates. “Because revenue sharing payments are asset-based, the already excessive compensation paid to the Plans’ recordkeepers became even more excessive as the Plans’ assets grew, even though the administrative services provided to the Plans remained the same,” it states.

In the Cassell v. Vanderbilt University complaint, it is noted that in April 2015, Vanderbilt consolidated from four recordkeepers to one. However, the compliant questions why it took the university so long to do so. “There was no loyal or prudent reason that Defendants failed to engage in such process long before April 2015, and before 2009,” the compliant says.

The complaint in Kelly, et. al. v. The Johns Hopkins University is here.

The complaint in Sweda v. The University of Pennsylvania is here.

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