Data & Research February 18, 2022

Retirement Industry People Moves

Creative Planning acquires JBJ Invest; Vestmark names direct indexing senior vice president; HBL expands ERISA litigation capabilities; and more.

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Art by Subin Yang

Art by Subin Yang








Creative Planning Acquires JBJ Invest

JBJ Invest, managing more than $735 million in assets, has joined forces with registered investment adviser Creative Planning LLC, to create and expand a comprehensive dental office specialty practice.

JBJ Invest provides financial planning and portfolio management services to individuals, families, trusts and institutions, particularly within its specialty health care niche. JBJ’s focus is providing top-tier investment advisory expertise, as well as business, life-management and retirement plan consulting services.

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While JBJ has a diverse client base, it was originally founded by pediatric dentist Dr. Jim Jackson, allowing it to serve the unique needs of the dental community. The firm plans to continue to guide health care professionals through an increasingly complex financial landscape.

DeVoe & Co. served as financial adviser to JBJ Invest on the transaction.

 

Vestmark Names Direct Indexing Senior Vice President

 Vestmark Inc., a provider of portfolio management tools and trading software, has named David Gordon as the company’s new senior vice president, direct indexing.

In this new role, Gordon will be responsible for expanding adoption of Vestmark’s direct indexing solutions, which enable client-driven customizations on tax management and personal preferences such as environmental, social and governance investing for wealth management firms and their clients. He will report to Ananya Balaram, Vestmark’s executive vice president of sales.

Prior to joining Vestmark, Gordon was director of the Eaton Vance Advisor Institute, responsible for supporting advisers who serve ultra-affluent clients with practice management education and tools for growth. Prior to that, he served as vice president in the Eaton Vance Wealth Strategies Group, representing the firm’s tax-managed index portfolios, structured alpha strategies, managed option programs and concentrated stock solutions. Earlier, he was vice president at AIM Private Asset Management, where he represented AIM and Invesco separately managed account strategies.

An Army veteran, Gordon completed his bachelor of science degree at the U.S. Military Academy at West Point and his master’s degree in business administration at the University of Texas at Austin. He holds Chartered Financial Analyst and Certified Private Wealth Advisor certifications.

“In recent years, we have seen more investors demand lower-cost, more tax-efficient investments while seeking the ability to express their personal values—such as ESG preferences—in their portfolios. The challenge has been figuring out how to do this in a scalable way,” Gordon says. “Direct indexing provides an ideal solution, and Vestmark is uniquely positioned to enable advisers to offer distinctive, customized portfolios to hundreds or even thousands of clients. I’m excited to bring more direct indexing capabilities to wealth managers and advisers, helping them to improve productivity, reach new client segments and drive revenue.”

Last month, Vestmark named Agnes Hong as chief investment officer and head of advisory services for Vestmark Advisory Solutions, Vestmark’s registered investment adviser. Hong will partner with Gordon to lead the development and growth of new offerings related to direct indexing.

 

HBL Expands ERISA Litigation Capabilities

Serving employer plan sponsors and benefit service provider clients in 35 states, boutique Employee Retirement Income Security Act and employment law firm Hall Benefits Law is partnering with the attorneys of Pridgen Bassett Law in a mutual of counsel arrangement.

Nancy Pridgen and Leslie Bassett, Pridgen Bassett Law partners, spent many years at Alston & Bird and King & Spalding representing clients in complex ERISA litigation matters. Litigants have many questions before and during ERISA disputes, and HBL can now directly serve plan sponsors who find themselves involved in such disputes.

Pridgen has litigated scores of ERISA benefits claims and fiduciary cases throughout the country. She developed this expertise in ERISA litigation while at Alston & Bird, where she litigated numerous class actions and other complex litigation involving employee pension cases and welfare benefit claims.

For over 18 years, Bassett has provided personalized ERISA representation to clients on all sides of benefit matters. She has represented sponsors and fiduciaries of employee benefit plans in complex employee benefit and ERISA litigation matters in federal and state courts throughout the country, including litigation involving breaches of fiduciary duty and employer stock held in 401(k) plans.

 

Alerus Adds Senior Retirement Specialist

Alerus has announced the addition of Lodi Larson as a senior retirement specialist. In this role, she will work with advisers, third-party administrators and plan sponsors to deliver retirement plan service. She is responsible for maintaining and strengthening current and new business relationships.

Larson has more than 10 years of experience in the retirement and insurance industries, serving in roles including new business specialist and as a 3(16) administrator, where she was responsible for the day-to-day management of 250 401(k) plans. She is also the co-founder of Mackenzy’s Little Miracles, a nonprofit established to continue her daughter’s legacy of giving back and paying it forward. She is based in Des Moines, Iowa.

 

HSA Bank Acquires HSA Solutions Provider

HSA Bank has announced that its parent, Webster Financial Corp., has signed a definitive agreement to acquire Bend Financial Inc., a cloud-based health savings account solutions provider.

This investment seeks to further advance efforts to deliver differentiation to customers through a simplified and modern approach to HSA management and engagement.

“Leveraging Bend’s cloud native technology and user-centered design, HSA Bank will enhance our digital experience for clients in an engaging and intuitive way,” says HSA Bank President Chad Wilkins. “This will enable our customers to better understand the financial impact of their health care decisions to make smart choices for long-term savings.”

The Bend technology provides detailed guidance to help consumers fully understand and optimize their health savings account and the choices that affect short- and long-term financial goals.

 

Innocap to Acquire BNY Mellon’s HedgeMark Business

Innocap Investment Management Inc. has announced that it has entered into a definitive agreement to acquire BNY Mellon’s HedgeMark business to create a single technology-enabled alternative investment platform.

The consideration for the sale will be a combination of cash and Innocap shares, allowing BNY Mellon to own a minority equity stake in Innocap’s combined $50 billion global platform, which focuses on helping institutional allocators access their investments through managed account services providing customized investment solutions, meaningful control, increased transparency and operational alpha over their investment portfolios.

The firm says clients will benefit from the combined talent, scale, flexibility, technology, innovation and global presence. The transaction will combine Innocap’s global alternative investment business with BNY Mellon’s scalable HedgeMark, a hedge fund managed account platform and risk services business.

HedgeMark’s current management is expected to join the Innocap team in senior roles. Operating as an independent, focused and scalable business will advance Innocap and HedgeMark’s shared focus of offering institutional allocators a superior approach to structuring, accessing and monitoring their investments.

Innocap and BNY Mellon will continue to leverage each other’s capabilities to support the needs of clients using their respective core services, such as custody and administrative services. The transaction is subject to normal closing conditions and regulatory approval and is expected to close in the first half of 2022.

In Practice February 18, 2022

Where Student Loan Debt, Retirement Savings and Financial Wellness Intersect

Research and advisory experts share their perspectives on how student debt affects workers and employers, while offering insights on the intersection of financial wellness and retirement planning.

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During a recent PLANADVISER Practice Progress webinar held earlier this week, three industry experts offered their insights about both the employer and employee perspective on student loan debt, and discussed how debt impacts financial wellness and retirement planning.

The panelists started by discussing a recent Legal & General Group study that shows student debt has affected Millennials more adversely than any other age cohort, with many 25-year-old to 40-year-old workers feeling financially impaired by the skyrocketing cost of college tuition at a crucial point in their lives—and in an economy struggling to recover.

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But it is not just Millennials feeling the squeeze, the panelists agreed. According to the study, as of November, Americans across all generations owed a collective $1.75 trillion in student loan debt. The ballooning cost of college tuition, coupled with catastrophic economic events such as the 2008 financial crisis and the COVID-19 pandemic, have left many Millennials, Generation Xers and Baby Boomers in poor financial shape.

Since 2004, student loan debt is estimated to have quintupled, even including inflation, said panelist Matthew Rutledge, associate professor of economics at Boston College and a research fellow for the Center for Retirement Research at Boston College. Simply put, he said, a lot more debt is making its way into household portfolios, and it’s affecting how people are making all sorts of financial and life decisions.

The panelists noted that college enrollment figures have stagnated and even declined in some areas, due at least in part to the growing expenses associated with higher education. On the other hand, more people are going to for-profit universities, the panelists said, or they are receiving online-only educations that are potentially not giving them the return that would make it worthwhile to invest in themselves through college loans.

Noting that student loan debt is carrying over into the older generations as well, Craig Copeland, senior research associate with the Employee Benefit Research Institute, said it’s important to take the full scope of the issue into consideration. Particularly affected are those mid- and event late-career professionals who go back to college to try and better themselves, as well as those preparing for their kids to attend college or helping them start out in life.

Individual Debt or Family Debt?

In a sense, the panel agreed, student debt has now become family debt.

Many parents want to help their children pay for school, and they are willing to take out student loans themselves or even draw upon home equity lines of credit, observed Heather Kessler, a relationship manager with Coldstream Wealth Management. As a result, many workers are entering retirement age while being burdened with more debt, causing them to either plan to work longer or to reduce their standard of living.

For the best family outcomes, Kessler said, it is imperative to start having conversations about wealth and debt early, such as when the child is beginning high school. That includes discussing whether the family has money set aside for college and how much, the expectations for the child during and after college, and if the student will have “skin in the game” by having to take out the debt on their own—which may help to teach them accountability.

Going to college is a self-investment, the panel emphasized and, like any investment, it does not always pay off as expected. For example, students who are getting graduate degrees and older workers going back to school well into their careers can be more at risk of increasing their student loan burden without necessarily seeing a commensurate increase in wages, Rutledge said. Naturally, if the additional degrees don’t lead to a salary increase or a career change into a more lucrative field, then they might not be a worthwhile investment. Making things worse, it can be harder to get government support at the graduate level if a student does decide to take on the extra financial burden.

The worst outcome, Copeland said, is when someone takes on extra debt and then does not graduate. People with “some college experience” on their résumés don’t do much better than those with just a high school degree, Rutledge agreed. If students are working just to gain credentials with a graduate degree, they should make sure it’s worth their time and money.

“That’s why I talk to my own students all the time about this dynamic, especially those who are leaving school and assuming it is a good move to go straight for a graduate degree,” Rutledge says. “If you don’t know that you are definitely going to be doing the thing that your graduate degree is preparing you for, that’s a gamble that could really go against you in the end. I tell them that it is usually worth getting some workplace experience first, to make sure that it’s worthwhile to take on that additional graduate debt.”

Student Debt and Retirement Savings

In one of his recent research projects at Boston College and the Center for Retirement Research, Rutledge found that there wasn’t much difference between people with various amounts of student debt when it comes to their participation in retirement plans. He said this was a surprising result, as he expected to see that those with less student debt would be more likely to participate. He attributed this dynamic to the behavioral aspects of investing and the influence of automatic retirement plan enrollment.

“Behaviorally, workers seem to be in either a student loan repayment phase or in the retirement savings phase,” Rutledge said, noting that this finding emphasizes the importance of auto-enrollment and the potential role of the employer in simultaneously supporting student debt repayment and retirement savings.

He said one clear and anticipated finding was that people without student debt are able to save more than their peers with such debt—about twice as much by the age of 30. He said this is because people who have attained college degrees without taking on student debt tend to be advantaged in a lot of ways, most notably in their ability to find room in their budget for saving for retirement.

The panelists noted that employers can now offer tax-free payments toward employee student loans through 2025, which can help people after college, much like tuition reimbursement can help those who go to college while working. To deal with the fairness issue of employees who have already paid off their student loans and can’t take advantage of the program, employers have also been adding college savings accounts to allow workers to start preparing for when their children go to college.

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