In Practice March 18, 2016

Advisers Are Focus of Asset Manager Innovation

Financial research firm DST kasina finds only a minority of asset managers are fully leveraging the data they collect about financial advisers and their clients.
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A new DST kasina study, “Increasing Advisor Engagement with Online Personalization,” finds asset managers are creating rich datasets about financial advisers, along with increasingly sophisticated technologies to leverage the data.

Yet, many of the platforms and websites through which advisers access and utilize asset manager services “still present a one-size-fits-all experience for new and unknown advisers.” While some firm’s get better at personalization and depth of service as the adviser relationship grows, the front-end drag is problematic because “capturing the attention of increasingly elusive advisers is one of the most significant challenges [asset managers] face.”

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“Because advisers have more product choices than ever, asset managers have to capture prospects early in the customer journey with relevant content and personalized experiences,” explains Julia Binder, head of strategic marketing research for DST kasina. “And since that journey typically begins online, the website is a critical starting point for demonstrating that the manager is anticipating and responding to each adviser’s needs, interests, and preferences.”

In the end this is likely a positive set of industry pressures from the advisers’ perspective, the research finds, because increased asset manager competition will almost certainly spell a more seamless and flexible adviser experience. For example, survey responses show that nearly all firms already have the data and the technology they need to begin personalizing online experiences for advisers, and many are taking steps to do so.

“We see a real opportunity for asset managers to recommend content, products, and next action steps on their sites, experiences that advisers readily have elsewhere on the web,” Binder adds. “A majority (52.4%) of advisers would use asset manager sites more if content and products were recommended for them.”

While 92.3% of asset manager websites already collect adviser data on website use, sales transactions and product use, just 11.5% use it to make real-time content recommendations on their websites.

More information about DST kasina research is at www.kasina.com. 

Compliance March 17, 2016

New Retirement Plan Fee Suit Against TIAA Isn't About Investments

A retiree claims too many mailings sent to retirees and beneficiaries is incurring costs that affects what plans and plan participants pay.
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In a new twist on excessive fee lawsuits, TIAA (formerly TIAA-CREF) is being sued for excessive fees caused by excessive mailings to retirees and beneficiaries.

In his lawsuit, Jay Lefkowitz, a participant in several plans administered by TIAA says he complained for years about getting separate mailings for each of the 15 accounts from which he was drawing retirement benefits. In some letters and calls he noted that he was not complaining about receiving too many mailings, but about the costs TIAA was incurring that would affect what plans and plan participants pay.

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In his complaint, filed in the U.S. District Court for the Southern District of New York, Lefkowitz says “As a fiduciary, TIAA has an obligation to administer the plans economically and in the best interests of the plan and its participants.”

In a lawsuit, TIAA told PLANADVISER, “We believe these claims are without merit and will vigorously defend ourselves.”

He is seeking relief individually and on behalf of other similarly situated plan participants, and on behalf of plans administered by TIAA, under the Employee Retirement Income Security Act (ERISA) sections 409 and 502. Among other things, Lefkowitz is asking the court to order TIAA to make good to the plans it administers all losses incurred as a result of the alleged fiduciary breach; to develop cost-effective systems for notifying beneficiaries of deposits to their accounts; to render an accounting of all sums spent on mailing materials; and provide appropriate relief to Lefkowitz and all others similarly situated to reimburse any financial loss as a result of the alleged breach.

NEXT: The alleged costs incurred

Lefkowitz worked for a number of academic and medical employers during the course of his career. He is a participant in the LIU Retirement Account, the NYU Retirement Plan, the Continuum Health Partners, Inc. Plan, the Cabrini Medical Center Plan, the Saint Barnabas Medical Center TDA Plan, the Mobilization for Youth Plan and the Yeshiva University plan—all administered by TIAA. When he first started receiving monthly checks from the plan, TIAA mailed them all in one mailing. However, about eight years ago, TIAA began to send individual statements in separate envelopes. 

In 2008, Lefkowitz starting writing to TIAA to go back to one mailing to save postage costs. In 2009, TIAA was electronically depositing checks into his bank account and sending him 15 separate mailings notifying him of the deposits. In his compliant, Lefkowitz noted that TIAA was paying $63 annually in postage, rather than $4.20. In one letter to TIAA, he pointed out that , assuming a minimum of one million pensioners similarly situated, multiple mailings were costing TIAA at least $60 million per year. 

TIAA said they were exploring the cost and feasibility of a solution, but later said there is no definitive time frame when contracts would be moved to a different platform to allow for one mailing per household. The complaint stated that “TIAA has access to enormous computer programming technology that could be used to provide multiple notices economically in combined mailings.” 

The complaint can be viewed here.

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