View Points January 27, 2014

Award Season

PLANSPONSOR/PLANADVISER Awards for Excellence celebrates leaders across the retirement plan industry
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Not only is it awards season across the U.S.—the Golden Globes, the Oscars, the Grammys—but it is awards season here at PLANSPONSOR and PLANADVISER. The upcoming PLANSPONSOR/PLANADVISER Awards for Excellence on March 11 in New York is the annual networking event to celebrate the accomplishments of the best of the best in the retirement plan industry.

This event is a wonderful evening that showcases how our industry works tirelessly to improve the retirement security of millions of Americans. Leading retirement plan sponsors and advisers, as well as the top product, investment and service providers, are honored at this exclusive gathering. Though many are competitors by day, the evening brings everyone together with a sense of camaraderie, something I have been proud to be a part of for many years.

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We recognize retirement plan sponsors with our annual PLANSPONSOR Plan Sponsors of the Year award winners and finalists. Retirement plan advisers are acknowledged with the PLANSPONSOR Retirement Plan Adviser of the Year finalists and PLANADVISER Top 100 Advisers. Our PLANSPONSOR Defined Contribution (DC) Survey Standouts and new PLANADVISER Adviser Choice Winners highlight providers.

Now, what exactly do all of these awards celebrate?

The annual PLANSPONSOR Plan Sponsor of the Year awards recognize retirement plan sponsors that demonstrate leadership in providing a more secure retirement for workers. Nominations are gathered from across the industry, and this year, we received approximately 100 nominations. Plan sponsors respond to those nominations and provide us with valuable information about their plan’s design, participants and administration so our panel of judges can select those we think best achieve success for their employees.

Here are this year’s finalists, announced today in five categories:

Corporate 401(k): <$50M

Cox Smith (San Antonio, Texas)
Draper Inc. (Spiceland, Indiana)
Landsman Development Corp. (Rochester, New York)

Corporate 401(k): $50–$1B

Akin Gump Strauss Hauer & Feld LLP (Washington, D.C.)
American Woodmark Corporation (Winchester, Virginia)
O.C. Tanner Company (Salt Lake City, Utah)
Range Resources Corporation (Fort Worth, Texas)
Vermeer Corporation (Pella, Iowa)

Corporate 401(k): >$1B

Eastman Chemical Company (Kingsport, Tennessee)
Google Inc. (Mountain View, California)
Microsoft Corporation (Redmond, Washington)

403(b)

Gilman School (Baltimore, Maryland)
Moffitt Cancer Center (Tampa, Florida)
Texas Association of School Boards Inc. (Austin, Texas)
Washington St. Board for Community & Technical Colleges (Olympia, Washington)

Public Defined Contribution

City of Austin Deferred Compensation Program (Austin, Texas)
State of Michigan, Office of Retirement Services (Dimondale, Michigan)
State of Tennessee (Nashville, Tennessee)

On the adviser side, this event will honor the 2013 PLANSPONSOR Retirement Plan Adviser of the Year winners, the 2014 PLANSPONSOR Retirement Plan Adviser of the Year finalists and the 2014 PLANADVISER Top 100 Advisers.

The 2013 PLANSPONSOR Retirement Plan Adviser of the Year Winners are:
Jeb Graham, CapTrust Advisors LLC in Tampa, Florida (individual)
Capital Strategies Investment Group in Oakbrook Terrace, Illinois (team)
Pensionmark Retirement Group, Headquartered in Santa Barbara, California (multioffice team)

The finalists for the 2014 Retirement Plan Adviser of the Year Winners will be announced in February.

The 2014 PLANADVISER Top 100 Advisers is an annual listing of the retirement plan advisers and adviser teams that stand out in the industry in terms of a series of quantitative measures: the dollar value of qualified plan assets under advisement (AUA); the number of plans under advisement; and those who have more than 20% of their practice focused on 403(b) plans, 457 plans, defined benefit (DB) plans or nonqualified plans.

This year’s qualification standards—which rise nearly every year—were quite high. Individuals had to have 65 or more plans or at least $500 million in AUA; teams needed to advise at least $1.5 billion in assets or a minimum of 125 plans; and multioffice teams needed to oversee $2.5 billion in plan assets or 200 or more plans.

Twelve defined contribution service providers will be recognized for their excellence as determined by PLANSPONSOR’s annual Defined Contribution Survey. These providers accumulated the greatest number of service “cups” in the survey’s five main asset classes—ranging from “micro” plans, with less than $5 million in assets, to “mega” plans, with over $1 billion in assets.

The top providers in each asset category were:

<$5M in Total Plan Assets      

BMO Retirement Services
GOLD23 Cups
Correll Co.                 
SILVER   
22 Cups
MBM Advisors Inc.  
BRONZE 
20 Cups
The Newport GroupBRONZE20 Cups
  

$5M–$25M in Total Plan Assets

American Trust & Savings Bank GOLD
23 Cups
MBM Advisors Inc.SILVER22 Cups
BMO Retirement Services 
BRONZE20 Cups

>$25M–$50M in Total Plan Assets 

Putnam Investments     GOLD22 Cups
BMO Retirement ServicesSILVER20 Cups
Milliman Inc.BRONZE17 Cups
        

>$50M–$200M in Total Plan Assets     

Milliman Inc.  GOLD18 Cups
Putnam InvestmentsGOLD18 Cups
The Newport GroupBRONZE16 Cups

>$200M–$1B in Total Plan Assets  

Milliman Inc.      GOLD18 Cups
MassMutual Financial GroupSILVER
17 Cups
TIAA-CREF        
BRONZE14 Cups
Transamerica Retirement SolutionsBRONZE14 Cups

>$1B in Total Plan Assets  

Bank of America Merrill Lynch GOLD14 Cups
T. Rowe PriceSILVER13 Cups
TIAA-CREF   
BRONZE10 Cups

 

The survey results—and rankings of 38 providers by their plan sponsor clients—were profiled in the November 2013 issue of PLANSPONSOR magazine, available online at: http://www.plansponsor.com/2013_PLANSPONSOR_DC_Survey.aspx.

This year, we are introducing a new category of PLANADVISER awards, the “Advisers Choice Awards,” which are given to firms who stood out in the seventh annual PLANADVISER Retirement Plan Adviser Survey. More than 600 retirement plan advisers participated in the survey and provided their picks for their preferred fund families, investment firms and defined contribution providers, as well as the most recommended mutual funds for their defined contribution plan clients.

The firms receiving Advisers Choice Awards at the dinner include:
American Funds
Charles Schwab
Fidelity Investments
Great-West Financial
J.P. Morgan
John Hancock Retirement Plan Services
MassMutual Financial Group
OppenheimerFunds
PIMCO
Principal Financial Group
T. Rowe Price
Vanguard

The full results of the 2013 PLANADVISER Retirement Plan Adviser Survey are available at: http://www.planadviser.com/research/ResearchStory.aspx?id=10737421137

For more information on the dinner and list of winners, visit: www.plansponsor.com/event/PSPAAwards2014.
Compliance January 27, 2014

DOL, SEC Order Firm to Restore $17M

The Department of Labor (DOL) has reached a settlement with Western Asset Management Company, a subsidiary of Legg Mason Inc.
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This settlement is a result of an investigation that revealed the purchase of prohibited securities that resulted in losses to the accounts of nearly 100 employee benefit plans and investment funds holding plan assets. The settlement also resolves findings that the company engaged in prohibited cross-trading of securities in the accounts of other retirement plans and funds, which caused additional losses.

The settlement was achieved in coordination with the Securities and Exchange Commission (SEC) and requires Western Asset to restore a total of more than $17.4 million to employee benefit plans and other accounts, and to pay more than $3.6 million in penalties.

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The investigation found that from January 31, 2007, to June 12, 2009, Western Asset used funds from accounts covered by the Employee Retirement Income Security Act (ERISA) to purchase approximately $90 million of securities that were prohibited for purchase and ownership by such accounts. Specifically, Western Asset purchased Glen Meadow Pass-Through Trust Securities for 99 ERISA-covered accounts that were under its management. The investigation determined that the company’s own compliance system recognized that the terms of the securities prohibited their ownership by ERISA-covered entities. However, Western Asset overrode the system, allowing the accounts to improperly purchase and hold the securities in their portfolios.

The DOL determined that Western Asset’s management team and compliance personnel became aware of the issue by October 2008, but failed to immediately correct the error or inform their clients about the situation. This violated the company’s own policies. The accounts continued to hold the prohibited securities until June 2009, at which time they were sold, resulting in significant losses.

The DOL’s investigation also found that from 2007 through 2010, Western Asset arranged 514 cross-trades involving ERISA-covered accounts. Western Asset sold fixed-income securities from client accounts, including ERISA-covered accounts to various broker/dealers. The company then repurchased the same securities from the same broker/dealers on behalf of different clients at a markup and without obtaining independent offers.

Cross-trade transactions are prohibited by ERISA, except under certain circumstances, to protect employee benefit plans from an investment manager’s conflicts of interest. The DOL investigation determined that as a result of unfair pricing involving these cross-trades, certain ERISA-covered accounts suffered more than $6 million in losses.

Western Asset is headquartered in Pasadena, California. Its clients include numerous ERISA-covered employee benefit plans.

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