Client Service May 18, 2020

Advisers Giving Back: Atlanta Retirement Partners

As the firm’s founder, David Griffin, explains, retirement plan advisers have a particular skillset that can be very useful in coordinating giving efforts during these unprecedented times.
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Art by Victor Juhasz


Heading into the coronavirus pandemic, some 30.7 million small and mid-sized businesses in this country employed a collective 60 million people, or roughly half the U.S. workforce. The subsequent economic turmoil caused by the pandemic is already having a disproportionately large effect on these workers, millions of whom have been furloughed or laid off.

As David Griffin, founder of Atlanta Retirement Partners and director of institutional retirement plans, observes, one of the sectors hardest hit by the ongoing downturn is the restaurant and hospitality industry.

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“I have a close friend who runs a neighborhood-style restaurant, and just a few weeks into the crisis, he already had to lay off a number of people,” Griffin recalls. “He was looking for a creative way to keep his people employed and to keep his doors open. We were looking for a way to give back. So, we came up with this plan where they would make food, and we would collect donations to buy it and then deliver it to people in need.”

The project started with deliveries of much-needed meals to three hospitals in the metro Atlanta area—Emory University Hospital, Grady Memorial Hospital and Piedmont Atlanta Hospital.

“Initially, I thought we should really be doing something to help folks in the medical community,” Griffin says. “And, at the same time, if we could try to benefit some people in the restaurant industry, which we know is hurting so bad, maybe we could kill two birds with one stone. It’s been a fantastic project to work on during these challenging times. It caught great attention right from the start and it was very efficient. Basically, a $10 donation provides one lunch, and the beautiful thing is it’s keeping people busy in the restaurant while also doing some good for the hospital workers.”

An Abundance of Giving

As the weeks went by, Griffin explains, more and more people in the Atlanta area started giving in similar ways, so his firm was able to refocus its efforts to helping the ancillary workers in the health care system—the janitors, the linen cleaners, etc.

“Then, at one point, we entered into a conversation with Zoo Atlanta here in the city,” Griffin says. “They are a client of ours and we knew they had furloughed a large number of their staff. The people that remained on staff were working 60 hour weeks at reduced pay. It was such a tough situation.”

A lot of people think Zoo Atlanta is part of the city government, but in fact it is a standalone nonprofit entity.

“We asked if they would benefit from our giving, and they said they could use the help,” Griffin explains, adding that his staff has embraced the notion that trying to support nonprofits and small business owners in the local community is of the upmost importance right now.

“These organizations are part of the fabric of our society,” he says. “We all enjoy going out and seeing our friends and having a beer or a burger. I think it is critically important that we do all we can to support all these small businesses. There are real people working behind the scenes in these places and we know a lot of them don’t have a whole lot in savings.”

Griffin notes it’s actually possible to give too much in a given situation.

“It’s funny to say, but we also have to be mindful in our giving efforts,” he explains. “You don’t want to be sending 100 meals to a place that only needs 30 and then see the 70 remaining lunches going to waste. We need to be sure we are being efficient and effective. To that end, I have been so impressed by the coordination and skill being shown by everyone. It’s actually quite easy to have too much support going to one place and not enough going elsewhere. That’s something to think through.”

Advisers as Giving Coordinators

Echoing the sentiments of others interviewed for the Advisers Giving Back profile series, Griffin says the particular skillset of retirement plan advisers makes them very capable coordinators of these efforts. Simply put, advisers understand how to be the quarterback or middleman figure that can build trust between parties that don’t know each other very well.

“A lot of the time we don’t like to be considered middlemen, but in this context, that’s exactly right,” Griffin says. “Just as we go between the plan sponsors and the providers to make sure everything is working properly—it’s exactly the same skillset that is useful in launching a project like this. My staff has really enjoyed this effort, as well. I am lucky to have some civic-minded people who work for me. It’s helping me with employee morale, as well, which is not something I had really anticipated.”

Griffin says he and his staff feel gratified to see others saying they have been inspired to give back in their own ways.

“I’ve been so impressed by some of the responses we’ve gotten from people outside of our business. I have a friend in the real estate world, for example, and he is consulting with us about how he can launch his own giving effort,” Griffin says. “I actually pointed him to an organization called The Meal Bridge. They have basically created an automated giving system that is doing what we are doing—keeping restaurants open while giving to the front-line and essential workers. The pace of innovation has been incredible.”

The Markets May 15, 2020

DC Plans and Pensions Partly Spared from Energy Rout

Many plans’ and individual investors’ exposure to energy stocks has dropped amid underwhelming results over the past five years, investment managers say.
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Art by Andrea D’Aquino


While the turmoil in the energy market has not been good for either defined benefit (DB) or defined contribution (DC) plans, because energy has been performing so poorly over the past five years, the exposure to energy in all of the broad indexes has dropped, investment managers say.

“In the past five years, energy markets have fallen by 50%,” says David Grumhaus, co-chief investment officer (CIO) and senior portfolio manager at Duff & Phelps. “Between 2000 and 2007, the S&P 500 Energy Sector Index was up 16%, whereas the broad S&P 500 market was up 2%. Since 2010, energy has been flat and the S&P 500 is up 11%.”

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Looking at the weight of the energy market in the S&P 500 in the past three years, it has ranged between 9% and 15%. Today, it has slipped to 3%.

“When you think of energy, you think of inflation and inflation protection,” Grumhaus continues. “These stocks tend to do very well in periods of inflation, but in the past 10 years, we have had very little inflation in the U.S. That has hurt the energy sector a lot.”

Jim McDonald, chief investment strategist at Northern Trust, says energy stocks have historically played a bigger role for DC and DB plans than they do today.

“Historically, they have appealed to DB plans for the income generation that highly profitable oil companies have provided through dividends,” he explains. “Secondly, for both DB and DC plans, energy equities have provided capital appreciation.”

Frank Rybinski, chief macro strategist for Aegon Asset Management, says it is the exploration and production (E&P) companies in the energy sector—those companies that explore for new sources of oil and gas and then dig wells—that primarily provide such growth.

“They are on the riskier side and are return-focused rather than dividend-focused,” Rybinski says. “But since the OPEC [Organization of the Petroleum Exporting Countries] issues first arose and COVID-19 further reduced demand for oil, we have started to see bankruptcies among the smaller exploring companies that were financially leveraged.”

While energy stocks now only compose 3% of the S&P 500 index, McDonald says, they make up as much as 12% of high-yield bonds, and that has hurt the performance of some plans’ fixed income portfolios.

“The equity exposure is very manageable, being only 3% of the stock holdings,” McDonald says. “For high-yield bonds, the exposure is greater, but the prices have already reflected the challenges the energy sector has been facing. In fact, I think that in the next year, energy will be a good investment for retirement plans.”

On the other hand, a real problem that DB plans now face is that with oil selling for $20 a barrel—down from more than $50 a barrel before the oil crash—many of these energy companies cannot continue their dividend trajectory, says Wylie Tollette, executive vice president, head of client investment solutions, Franklin Templeton Multi-Asset Solutions.

“To be able to pay those dividends requires more expensive oil,” he explains. “That is the real source of damage to DB plans.”

That being said, Tollette says many investors have been hesitant to move out of these energy stocks.

“They think that the energy market has settled to a new equilibrium,” he says. “Demand is down 75% since mid-February. Still, many investors are hesitant to sell, thinking that the COVID-19 crisis will eventually abate. They are also heartened by the new OPEC agreement with Russia to start to constrain supply, which will help boost prices.”

As far as how the turmoil in the energy markets will affect green investing, Drew Carrington, head of institutional defined contribution investment only (DCIO) for Franklin Templeton, says he doesn’t think the energy turmoil will have any strong effect on the growing interest in environment, social and governance (ESG) investing among retirement plans.

“On the DC side, you may see continued interest in adding ESG investment options to the lineup, but I still don’t think we will see standalone green energy investment choices on the menu,” Carrington says.

On the DB side, Tollette says, many DB plans, particularly public DB plans, are serving purposes other than risk and return.

“They are able to put other objectives in their investment mandates,” he says. “When that is possible, we have seen them start to lighten up or completely divest from fossil fuels, as well as do proactive investments into green energy to help promote that industry and address climate change. Others are restricted from doing this because of their fiduciary responsibilities. They cannot fully divest from energy because it is such a large part of the market. As well, energy stocks have offered attractive characteristics from a risk and return standpoint.”

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