DCALTA Publishes Framework for Implementation of Private Equity in DC Plans

DCALTA says its framework addresses the key implementation challenge identified by plan sponsors: operational aspects of daily valuation of private alternative assets that do not trade on an exchange.

Last June, the Department of Labor (DOL) issued an Information Letter sanctioning the use of private equity investments in asset allocation vehicles offered in defined contribution (DC) plans.

The Information Letter addressed concerns with offering private equity in DC plans—the complex organizational structure, potentially higher fees, illiquidity and complexity of valuations, among other things—with five paragraphs detailing considerations for plan fiduciaries in evaluating and monitoring the investments.

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Now, the Defined Contribution Alternatives Association (DCALTA) has published a practical framework to provide plan sponsors clarity on the implementation of daily valuation of private assets. In its white paper, “Daily Valuation of Alternative Assets in DC Plans,” the association suggests a framework with procedural, quality management and governance components. It further explains that:

  • Daily valuation and pricing can be achieved using an existing approach and in accordance with accounting and legal requirements;
  • Technical issues such as reporting lag, valuation accuracy and dilutive effects can be handled systematically and fairly; and
  • Existing audit pathways remain intact, i.e. valuation remains tethered to the net asset value (NAV) reported by the direct manager.

“The framework encompasses 11 positions grounded in principles of fair valuation, ISO [International Organization for Standardization] quality management and effective governance,” says Sheridan Porter, DCALTA member and co-founder of valuation technology firm FEV Analytics. “These elements are important for retirement savers and plan sponsors to have confidence that the procedure used to value these private assets is fair and robust.”

The DCALTA white paper can be accessed from here.

Retirement Industry People Moves

Private equity firms acquire Wells Fargo Asset Management; Voya Retirement expands small-mid market corporate team; and more.

Art by Subin Yang

Voya Retirement Expands Small-Mid Corporate Team

Voya Financial’s retirement business has named Kris Masias as a regional vice president of sales for the company’s small-mid corporate market business. 

In this role, Masias is responsible for generating new business and building key distribution relationships in both Oregon and Idaho. He will be working through all channels within the corporate 401(k) market that serve employers with plans ranging from start-ups to $75 million in assets.

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Masias holds Series 6, 7, 22, 63 licenses as well as variable life and health licenses. He attended the University of Connecticut, where he earned a bachelor’s degree in economics. Based in Portland, he started at Voya on February 16 and reports directly to Nick Wilson, senior vice president of sales for the small-mid corporate market’s West division.

T. Rowe Price Makes Key Hires

T. Rowe Price Retirement Plan Services has hired Lynn Roy as head of third-party administrator (TPA) distribution. The role will involve directing and overseeing all aspects of the firm’s national strategy for TPA distribution.

Roy joins T. Rowe Price from Mass Mutual and has 24 years of experience dedicated to the TPA distribution model. She is a mentor in the Women in Pension Network (WIPN) organization and is an active contributor to the National Institute of Pension Administrators (NIPA), having served as both president and board member.

The firm has also recently hired Lindsay Moody as a retirement sales consultant. Moody is responsible for the sale of T. Rowe Price core market recordingkeeping solutions and will focus on partnering with financial advisers and TPA’s in the Great Lakes territory.

Moody brings more than nine years of experience in the defined contribution (DC) industry.

GTCR and Reverance Capital Partners to Acquire Wells Fargo AM

Private equity (PE) firms GTCR and Reverence Capital Partners will acquire Wells Fargo Asset Management (WFAM) in a multifaceted deal valued at $2.1 billion. 

Technically speaking, GTCR and Reverence Capital have signed a definitive agreement to acquire Wells Fargo Asset Management from the broader Wells Fargo & Co. business. The deal means that GTCR and Reverence Capital will also acquire Wells Fargo Bank’s North American-based business of serving as trustee to its collective investment trusts (CITs) and all related WFAM legal entities.

According to announcements by the PE firms and Wells Fargo & Co., the transaction is expected to close in the second half of this year, subject to customary closing conditions. As part of the transaction, Wells Fargo & Co. will own a 9.9% equity interest and will continue to serve as “an important client and distribution partner.”

For its part, GTCR is a private equity firm mainly focused on leveraged buyouts, leveraged recapitalizations, growth capital and roll-up transactions. Since 1980, GTCR has invested more than $15 billion in over 200 companies. On its website, Reverence Capital Partners says its focus is on “a broad spectrum of middle-market financial services companies.” Its current portfolio already includes Russell Investments and Advisor Group.

According to various statements issued by the parties in this latest deal, Nico Marais, WFAM’s CEO since June 2019, will remain in his position. He and his leadership team will continue to oversee the daily business operations, while Joseph Sullivan, former chairman and CEO of Legg Mason, will be appointed as executive chairman of the board of the new company operating under GTCR and Reverence Capital.

Marais adds that, following the transaction, the WFAM business “will be even better positioned to execute our strategy and provide our clients with innovative products and solutions to help them reach their investment goals.”

Read PLANADVISER’s full coverage here.

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