Deals & People September 27, 2019

Retirement Industry People Moves

American Century selects chief marketing officer; GW&K adds members to advisory team; Alight Solutions announces new partnerships EVP; and more.

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Art by Subin Yang

American Century Selects Chief Marketing Officer

American Century Investments has named Erik Schneberger as chief marketing officer (CMO) for the global asset management firm. In this new role, Schneberger will lead the teams currently responsible for channel marketing, brand, marketing operations, value-add, client events, corporate communications and digital.

Schneberger reports to American Century Chief Client Officer Joe Schultz, and is based in New York.

“Erik brings significant industry experience and a track record of success to his role as CMO,” says Schultz. “Throughout his career, he’s demonstrated leadership in brand and digital strategy, an ability to develop quality teams and a strong understanding of client needs in this dynamic space. Erik will lead efforts to build upon our success aligning firm-wide marketing resources with our client relationship and engagement activities.”

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Prior to joining American Century Investments, Schneberger served as head of marketing for OppenheimerFunds. In that role, he reshaped brand strategy and the marketing function’s operating rhythm to better support the firm’s outcomes. His responsibilities included brand strategy, advertising, digital strategy, creative services, public relations, client insights and channel marketing. His various teams focused on promoting the firm’s thought leadership and investment strategies across retail, high net worth and institutional channels. 

Before his tenure at OppenheimerFunds, Schneberger oversaw the digital, creative, multimedia and marketing operations functions at Neuberger Berman. Previously, he was the head of digital strategy for OppenheimerFunds. Earlier in his career, he served in several roles across the financial services and management consulting industry with GE Money, BearingPoint and AON Hewitt. Schneberger earned his master’s degree from the University of Connecticut and his bachelor’s in computer information systems from the Indiana University Kelley School of Business.

GW&K Adds Members to Advisory Team

GW&K Investment Management (GW&K) announced a key promotion and addition to its advisory sales team.  

Brian King has been promoted to vice president, national sales manager at the firm, and Charles Kace has been hired as vice president, relationship manager, national accounts. “These appointments demonstrate our commitment to strategic partnerships with both advisers and clients,” says Thomas Powers, co-president of GW&K.

A veteran sales and relationship manager, King manages the sales efforts for GW&K’s advisory business channel and has had a long tenure with the firm.  Most recently, he was responsible for new business development and relationship management on the national accounts team. Previously, he spent several years at AMG Funds, LLC, where he was a senior portfolio specialist with a focus on GW&K Strategies. Prior to AMG Funds, he had spent seven years as a GW&K regional sales director responsible for new business development in the Midwest region. King graduated from the College of the Holy Cross with a bachelor’s degree. He has also earned the CFA designation.

Kace joins the firm as a member of GW&K’s national accounts team, where he is responsible for relationship management.  He began his career at Eaton Vance Distributors, Inc., where he held a variety of positions over 14 years.  Most recently, Kace was an intermediary regional sales consultant at Robert W. Baird where he was responsible for developing relationships for the eastern U.S. Kace earned a bachelor’s degree from Ohio University.  He also holds the Series 6, 7, 63 and 65 licenses with FINRA. 

Alight Solutions Announces New Partnerships EVP

Julie Devine has joined as Alight Solutions as executive vice president of Strategic Channels & Partnerships.

Devine will lead a team responsible for building stronger commercial relationships and new go-to-market alliances. This includes broker and carrier communities and partners such as Workday, Cornerstone, Wipro, retirement advisers, third party evaluators, industry analysts, and the firms in Alight’s Partner Network. Most recently Devine served as head of client success and strategic partnerships at Maxwell Health/Sun Life Financial Services. Earlier in her career, she worked at Highroads, a SaaS startup offering health plan product management services to large businesses. Prior to that, Devine was a human resources (HR) consultant at Mercer.

T. Rowe Price Builds Up Target-Date Team

T. Rowe Price has announced transitions in its Multi-Asset division.

Jerome Clark, CFA, who co-manages T. Rowe Price’s multi-asset target-date strategies, will step away from day-to-day portfolio management effective as of January 2021. Following this 15-month transition period, Clark will remain with the firm and focus on strategic initiatives for the Multi-Asset division and target-date franchise. He will continue as a member of the firm’s Multi-Asset Steering Committee and will remain on the Asset Allocation Committee through January 1, 2021. Clark has spent his investment career at T. Rowe Price and was the first portfolio manager of T. Rowe Price’s target-date funds when the firm’s Retirement Funds launched in 2002. He joined the company in 1992 and a quantitative analyst in the Fixed Income division and later served as portfolio manager of the U.S. Treasury Long-Term Bond Strategy from 1998 through 2003.

Wyatt Lee, CFA, co-portfolio manager of the firm’s multi-asset target date strategies with Clark, will become head of Target Date Strategies, a new role with oversight of the full target-date team, effective October. Lee has worked as a target-date portfolio manager since 2013 and specifically as co-portfolio manager of the Retirement Funds since 2015.  He also serves on the firm’s Multi-Asset Steering Committee and its Asset Allocation Committee. Lee has 22 years of investment experience, 20 of which have been with T. Rowe Price.

Kim DeDominicis will be promoted to portfolio manager of the target-date portfolios, reporting to Lee, effective October 2019. She has been an associate portfolio manager of the target-date portfolios since 2015 and a member of the Multi-Asset Division since 2007. DeDominicis has 20 years of investment experience and 19 years with T. Rowe Price. She will also continue as lead manager of T. Rowe Price’s College Savings Plan investment portfolios.

Andrew Jacobs van Merlen, CFA, will join the target-date team as a portfolio manager, also reporting to Lee, effective January 2020. Jacobs van Merlen is currently an associate portfolio manager in the Multi-Asset Division. He has 16 years of investment experience and 19 years with T. Rowe Price.

These new roles are an extension of the investment the Multi-Asset Division has made to the functions supporting the firm’s target-date portfolios over the last several years, including the growth of the group’s multi-asset investment analyst, technology, research and development, portfolio specialist, and analyst teams.

Wells Fargo Board of Directors Names CEO and President

The Board of Directors of Wells Fargo & Company has named Charles Scharf as the company’s chief executive officer and president, and a member of the Board of Directors, effective October 21. Scharf was chairman and CEO of Bank of New York Mellon. 

In March, the board appointed C. Allen Parker as interim CEO and president and a member of the board. Parker will continue to serve in these roles until Scharf joins the company, and will thereafter support the transition as a key member of the company’s leadership team and general counsel.

Prior to his role at BNY Mellon, Scharf was CEO of Visa, Inc., and before that, was managing director of One Equity Partners, the private investment arm of J.P. Morgan Chase & Co. He also served as chief executive officer of Retail Financial Services at J.P. Morgan Chase and chief executive officer of the retail division of Bank One Corp. Scharf has been CFO of Bank One Corp., CFO of the Global Corporate and Investment Bank division at Citigroup, and CFO of Salomon Smith Barney.

Scharf will continue to be located in New York. He serves on the Board of Directors of Microsoft Corporation. Scharf is also a member of the Business Council, Chairman of the New York City Ballet and a member of the Board of Trustees for Johns Hopkins University.

 

Compliance September 27, 2019

Summary Judgement Goes for Invesco in ERISA Lawsuit

However, the judge voiced concerns about the amount of plan assets invested in proprietary products and has granted the plaintiffs leave to again amend their compliant.

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The U.S. District Court for the Northern District of Georgia, Atlanta Division, has issued summary judgement in favor of the defense in a broad Employee Retirement Income Security Act (ERISA) lawsuit targeting Invesco.

Plaintiffs filed the complaint back in June 2018, naming a laundry list of defendants from across the Invesco organization, including individual officers and managers. Allegations leveled in the proposed self-dealing class action challenge varied widely and include many similar to other litigation. The plan was accused of offering too many investment options—nearly all of them affiliated in some way with Invesco—and of failing to use its leverage as one of the larger employer-sponsored retirement programs in the U.S. to negotiate for reduced costs for the benefit of plan participants.

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Beyond these allegations, plan officials and Invesco leaders were accused of breaching their fiduciary duties by offering imprudent affiliated exchange-traded fund (ETF) investment products to participants. Further, the lawsuit alleges that the plan offered worse-performing retail shares instead of better-performing institutional shares. The list of allegations went on to suggest the firm added poorly performing proprietary mutual funds to the plan; that it offered imprudent Invesco-branded target-date funds (TDFs) with high expenses and poor performance; and that the plan fiduciaries erred in connection with offering collective investment trusts.

Ruling on these allegations, the Court sides with Invesco defendants, who argued for summary dismissal of the case based on the grounds that they had engaged in prudent and loyal processes in the operation of the retirement plans in question. However, the Court has granted the plaintiffs a 20 day period to amend the compliant to potentially address the case’s fatal shortcomings.

The decision cites a number of important precedent-setting cases, including the Supreme Court’s decision in Tibble vs. Edison.

“Because lawful and prudent decisions may have the same result as unlawful and imprudent decisions in this context, complaints that, when read as a whole, merely allege that fiduciary duties were breached because funds underperformed do not state a claim,” the decision states. “With the exception of one fund, the amended complaint fails to plausibly plead underperformance. … Plaintiff’s own allegations make clear that the example Invesco funds in fact outperformed seventeen of Plaintiff’s nineteen chosen alternatives at various points in time. … Furthermore, while the amended complaint is full of references to ‘excessive fees,’ with the exception of one fund, Plaintiff does not plead anything about the fees or expense ratio of any of the funds at all.”

As to why the Court has left the plaintiffs room to amend their complaint again, the following rationale is provided: “The Court does not agree with defendants that leave to amend the complaint should be denied as futile. Plaintiff’s allegations that during the class period, between 55% to 68% of all plan investments were affiliated with Invesco, and that by December 31, 2016, 81% of investments made by plan participants were in Invesco-affiliated funds, give the Court pause when it takes into consideration the allegation that the bonus performance criteria under the Invesco Executive Incentive Bonus Plan includes assets under management, net revenue yield on assets under management, operating revenues, and net asset flows.”

These allegations are further concerning, the Court states, considering the plaintiff’s allegations regarding the limitation of access to non-Invesco affiliated funds. In the end, though, the Court “cannot say that plaintiff has plausibly alleged that this state of affairs arose by conduct tainted by failure of effort, competence, or loyalty.”

The full text of the ruling also includes a detailed discussion of what it takes for a plaintiff to prove Article III standing under the U.S. Constitution in the context of an ERISA lawsuit. The Court even goes so far as to state its opposition to the ruling issued in the influential case known as Dorman v. Charles Schwab Corp.

“This Court would not reach the same result as Dorman, at least at this stage of the proceeding,” the decision states. “Plaintiff has alleged that misconduct regarding the [self-directed brokerage account] arises from the same misconduct that injured his retirement savings and the retirement savings of all participants. While the Court has dismissed these counts with leave to amend, the Court cannot say as a matter of law that plaintiff would never have standing to bring such a claim in connection with a properly alleged cause of action against defendants. Defendants do not contend that the [brokerage account] is somehow not part of the plan. Barring a plaintiff who may otherwise hold an ERISA claim from challenging conduct which is part and parcel with the plaintiff’s claim is at odds with the Supreme Court’s cases which hold ERISA’s enforcement provisions protect the entire plan. A plaintiff need not show that he has invested in every plan option in order to have standing to challenge the allegedly violative conduct, so long as ‘the gravamen of the plaintiff’s challenge is to the general practices which affect all of the plans.’”

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