Client Service September 1, 2023

Transamerica Renews Small Business Retirement Plan Campaign

Starting September 1, the provider will launch a campaign called 401(k)ares that will include an incentive to transfer from a SIMPLE IRA plan to a Transamerica option.

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Transamerica Corp. announced that, as of September 1, it will be making a renewed push to earn small business retirement plan clients with an advertising campaign called 401(k)ares that includes incentives to leave government-provided Savings Incentive Match Plans for Employees, or SIMPLE IRAs.

Cedar Rapids, Iowa-based Transamerica announced that the campaign will include a $250 credit for third-party administrator partners that transition an employer’s SIMPLE retirement plan to a Transamerica retirement plan. To be eligible for the credit, the SIMPLE plan must terminate in 2023 and transition to the Transamerica plan in 2024. Businesses selecting Transamerica as their retirement plan provider in the final months of the year will also have some health and flexible spending account administration and participant fees waived for two quarters.

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In addition, during the retirement plan’s conversion period, Transamerica will extend its plan administration support communication services for free, in collaboration with third-party administrator partners. The partners will receive additional credits for transferring existing retirement plans as part of this campaign.

Transamerica makes the push as state mandates and incentives from the SECURE 2.0 Act of 2022 are intended to push more small businesses to offer workplace retirement plans.

“Transamerica is committed to helping everyone secure a financially stable future, and our special offering for small businesses reflects that pledge,” Phil Eckman, president of workplace solutions at Transamerica, said in a statement. “We believe all American workers need access to tax-deferred workplace savings programs, and this opportunity helps both employers and employees build a more secure future.”

The renewed push adds to a January 2022 announcement Transamerica made regarding the availability of a packaged solution created for small companies seeking to start a new workplace retirement plan for their employees. Named the Transamerica Advantage Solution, the program was described by the firm as “a configurable retirement plan solution that combines all the technical expertise and participant services designed to operate a workplace retirement savings program efficiently.”

In April, Transamerica began providing recordkeeping and 3(16) plan administration services to a new pooled employer 401(k) retirement plan solution from Smart Retirement Solutions Inc., called “Choice PEP.” 

Transamerica is not alone in its push to serve small companies. On August 29, retirement technology provider Smart USA widened its fiduciary services division to offer pooled employer plans and single employer plan solutions.

Compliance September 1, 2023

Complying With SEC’s Hypothetical Performance Marketing Rules

Advisers should use a process that makes it tough to fall out of compliance, not look for ways to dodge it on a technicality, according to experts.

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The Securities and Exchange Commission’s new adviser marketing rule, finalized in November 2022, saw its first enforcement action on August 21, when a $1 million fine was levied against Titan Global Capital Management USA LLC, an investment advisory firm, for deceptive marketing materials related to hypothetical performance.

The marketing rule applies to all communications delivered to more than one person and offering or describing an adviser’s services, unless it is “extemporaneous live communication”—off-the-cuff or “truly bespoke” communication—according to Dan Bresler, a partner in the law firm Seward & Kissel LLP. Even if the same talking points are delivered to individuals one at a time, it still counts as more than one person, and would also qualify as prepared remarks and would therefore be subject to the rule.

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Communication involving hypothetical performance, though, is subject to the marketing rule even if communicated only to a single person. Bresler says the SEC believes that “hypothetical performance raises significant enough concerns from a misleading and conflicts perspective that those communications should go through the required compliance oversight.”

Hypothetical performance can include forward-looking projections, but it more commonly features hypothetical application of past data to a new product, portfolio or strategy that did not previously exist. 

Advisers should avoid looking for creative ways to evade the marketing rule’s restrictions on hypothetical performance and instead find ways to follow it, Bresler recommends. For example, advisers should not worry if what they are saying is technically hypothetical or not, or what the size of their audience is or might be in the future. Instead, the “more common approach is just to accept that it is an advertisement.”

Bresler says advisers should “have a process for preparing materials” that would meet SEC marketing requirements and, “once you have that process running, you can generate materials pretty quickly, and you don’t need to worry if you get into hypothetical performance.”

Even though the SEC charged Titan with violations related to hypothetical performance, Titan was cited for infractions that would have been problematic under the previous marketing rule, according to Bresler. Specifically, citing a 2,700% annual return without mentioning that the figure was based on a cherry-picked three-week window extrapolated to one year was “egregious” and “under any regime, that would be misleading.”

Bresler says the SEC avoided some of the more controversial elements of the marketing rule in the Titan settlement, such as the requirement that marketing materials featuring gross performance must also show net performance by accounting for related fees.

Bresler explains that some advisers may advertise performance of a portfolio by sector or by region and may struggle to aggregate the fee structures among various investments into one number in order to calculate net performance. Because of this ambiguity, “enforcement for those issues would be a big concern for market actors,” and he believes advisers are hoping for additional “guidance before enforcement.”

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