Deals & People September 25, 2007

AXA Equitable Appoints Fidelity Exec as Head of Corporate Retirement Planning

AXA Equitable Life Insurance Co. has named William McDermott as Executive Vice President of Corporate Markets, where he will develop retirement solutions for large companies.
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McDermott will work with a team to develop offerings related to the company’s existing investment products, guarantees, and financial planning services, according to a company press release.

For the past 11 years, McDermott worked in various divisions of Fidelity Investments, most recently as Executive Vice President of Large Corporate Market Retirement Services and Fidelity Employer Services Co.

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McDermott was a Partner in Business Development at Hewitt Associates from 1987 to 1996, where he was responsible for sales and business development in disciplines such as benefits outsourcing and compensation services.

“Bill will explore new marketplaces and distribution channels for our life, annuity, and investment products, thereby contributing to AXA Equitable’s ongoing success,” said Christopher “Kip” Condron, the Chairman and Chief Executive Officer of AXA Equitable, in the press release.

The Markets September 25, 2007

According to ICI, 401(k) Investors Get a Good Deal

At a time when the level of plan fees and the extent of their disclosure are a key issue in the retirement services space, a mutual fund trade group says 401(k) participants are actually getting a good deal on their investment expenses.
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In a new report entitled “Economics of Providing 401(k) Plans: Services, Fees, and Expenses, 2006,” the Investment Company Institute (ICI) offers an argument that, because employers often pick up some plan expenses and other factors, participants get the benefits of saving for retirement at what ICI contends is a comparatively low cost.

The ICI report lays out the history and basic structure of the workplace savings programs and details the array of services the group says workers get in exchange for paying at least a portion of the plan’s operating expenses. “401(k) plans provide many American workers with the opportunity to invest cost effectively in mutual funds,” ICI declares in the report.

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Factors listed by the report as affecting “the relatively low expense ratios incurred by 401(k) plan participants” include:

  • competition among mutual funds and other investment products to offer shareholders service and performance;
  • plan sponsors’ decisions to cover a portion of the 401(k) plan costs, which allow them to select funds or share classes with less built-in servicing economies of scale that a large investor such as a 401(k)plan can achieve;
  • performance and cost-conscious decision-making by plan sponsors; and
  • unlike shareholders outside of 401(k) plans who typically pay for the assistance of a financial adviser when investing in mutual funds, there is a more limited role for such financial adviser services inside these plans.

Generally, because many plan sponsors pay a larger share of plan fees than legally required, participants reap the benefits, ICI argues.

“Many employers voluntarily cover some or all of plan-related costs that legally could be shouldered by the plan participants,’ the group asserts in the paper. “Any costs not paid by the employer, which may include administrative, investment, legal, and compliance costs, are, effectively, paid by plan participants. As a result, the employer’s decision to pay a portion of plan costs can have a significant impact on the 401(k) plan fees charged to plan participants. Generally, when more of the plan costs are subsidized by the employer, the costs paid by plan participants are lower.’

The ICI report is here. http://www.ici.org/stats/res/fm-v16n4.pdf

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