Industry Reacts Positively to DOL’s Association Retirement Plan Rule
While there is some disappointment that it did not include a provision for open MEPs, any option that could appeal to small businesses to offer a retirement plan is seen as a positive.
Industry insiders believe that while the Department of Labor’s (DOL’s) new rule on association retirement plans (ARPs) is somewhat disappointing in that it did not pave the way for open multiple employer plans (MEPs) for employers without a common nexus, it is a positive step in the right direction of providing yet another cost-effective option for small businesses to offer retirement plans.
The rule, which will go into effect on September 30, will permit employers to connect with associations of employers in a city, county, state or multi-state metropolitan area. They will also have the option of banding together by industry. This is the first time that employers will have the opportunity to join a MEP based on geographic location, says Erin Turley, a partner with McDermott Will & Emery in Dallas.
For instance, a local chamber of commerce might sponsor an association retirement plan, says Drew Carrington, head of institutional defined contribution at Franklin Templeton in San Mateo, California.
In fact, right after the final rule was issued by the DOL, the Las Vegas Metro Chamber of Commerce announced it would be the first in the nation to create an association retirement plan. The chamber says it is doing so because the pooled assets will give small business members a better deal from investment advisers as well as lower fees.
“The Las Vegas Metro Chamber is proud to work with the Department of Labor to be a national leader in marking the new association retirement plans available to small businesses in Nevada,” says Mary Beth Sewald, president and CEO of the chamber. “This is an innovative solution to help small businesses give their employees access to retirement plan choices often only available to large companies.”
“It is a step in the right direction of marking retirement plans available to more employers and enable the establishment of small plans [by employers that] may not have the expertise on plan design or investments to get the benefits of economies of scale,” Carrington says. This might appeal to those small businesses that currently do not offer a retirement plan, as well as prompt those that do have a plan to weigh whether this arrangement might be more cost effective, he says.
“The real benefit of the association retirement plan rule is to expand the availability of retirement plans,” Carrington says.
Kevin Murphy, head of defined contribution strategic accounts at Franklin Templeton adds: “We view this as very positive for small businesses and advisers focused on small businesses to offer plans with all of the bells and whistles found in large plans, that is, institutionally priced plans. In fact, we see this as a fantastic opportunity for advisers.”
In addition, the rule also allows retirement plans to be sponsored through professional employer organizations (PEOs), i.e. third-party human resources providers offering services to small and midsized plan sponsors. “The rule is likely going to be significant for PEOs because it clears up a grey area under which they have been operating,” Turley says. “Previously, they only had a safe harbor to operate under the IRS code. Now, they can operate under ERISA [the Employee Retirement Income Security Act]. This will give PEOs and their clients peace of mind.”
However, there is one downside to the association retirement plans, she adds. “One of the drawbacks is that the main fiduciary of an association MEP cannot be a financial institution, insurer or third-party administrator, which are the precise entities that typically provide these types of plans,” she says. “The DOL’s reason for doing this is to protect people from fraud. There has been bit of a checkered history with respect to MEPs because they don’t have as much oversight [as traditional retirement plans do] because of their disassociated governance structure.”
Matt Foster has joined Franklin Templeton as a national retirement consultant.
Effective July 29, Foster is responsible for sales and retention of Franklin Templeton Defined Contribution and Workplace investment solutions through third-party retirement plan providers, mid-market retirement advisers and consultants with distribution partners in the U.S. defined contribution (DC) space.
He will report to Yaqub Ahmed, head of Investment-Only–US (DC & Insurance/Sub-Advisory), and will work closely with Ahmed’s leadership team, including Drew Carrington, head of Institutional Defined Contribution, Jacob Armstrong, head of Insurance and Subadvisory, Jason Colarossi, national retirement strategist Defined Contribution Division-US, and Kevin Murphy, head of Strategic Accounts Defined Contribution Investment Only Division-US.
This newly created position is a hybrid role with primary responsibilities including national coverage of home office relationships of DC advisory/consulting firms, outsourced fiduciaries and DC recordkeepers. Additionally, this position will be responsible for coverage as the primary DC liaison for a specific focus list of DC specialist advisers and consultants in a defined region.
Prior to joining the firm, Foster was a director, Retirement National Accounts at Invesco. Foster has a bachelor’s in business administration degree from Baylor University, holds the Series 6, 7, 26, 63, 66 and 79, as well as the chartered retirement plan specialist (CRPS) designation.
Foster will work closely with the DC team—both institutional and adviser-sold—to implement the DC strategy within both market segments. In particular, he will split time between home office meetings and regular territory travel, with the main purpose of articulating the firm’s vision in the DC space and ultimately drive new business development.
Foster will collaborate across multiple teams and lines of business including, with the Defined Contribution Strategic Account Team, Institutional Defined Contribution team, Insurance/Sub-Advisory and other U.S. retail and institutional sales and service teams to develop and manage client relationships for the firm’s broader DC business. Foster brings an extensive background in the DC market, with a high level of knowledge about investments, regulatory issues, business building and practice management issues.
Schroders Grows West Coat Presence with Two Hires
Schroders has added two senior leaders as it continues to expand its West Coast presence as part of the firm’s strategy to grow its North American distribution platform. Deb Boyden joins as head of U.S. Defined Contribution and Anna Sayer joins as a sales director, Wealth Management Solutions.
Boyden brings over two decades of experience in the defined contribution (DC) space and will be responsible for leading the strategy, development and execution of DC products, as well as overseeing the firm’s West Coast presence. She joins Schroders from Lazard Asset Management, where she was senior vice president, Defined Contribution, National Accounts, responsible for progressing the DC footprint across the Western US. Boyden is based in Oakland, California and will report to Joel Schiffman, head of U.S. Defined Contribution and Insurance Sales.
Sayer joins with a strong background in business development in financial services. She previously worked at PIMCO as a senior associate, Advisory Services focusing on the retirement investment adviser (RIA) and Family Office channel. Prior to PIMCO she worked at Insight Investment and Rogge Global Partners. Anna is based in San Diego, Cal. and will report to Jon Mackay, head of Sales, Wealth Management Solutions.
These changes build on the firm’s ongoing enhancements to the U.S. distribution team to advance its North American growth strategy. In February, Schroders announced the hiring of Schiffman, as well as the promotion of Tiffani Potesta to head of Distribution Strategy in North America. In March, Marni Harp was promoted to head of Institutional Consultant Relations for the U.S. and Scott Garrett joined as an institutional sales director, Taft-Hartley.
Voya Hires Regional VP of Sales
Voya Retirement recently hired Kyle Birchall as a regional vice president of sales, eastern Pennsylvania region, for the company’s Small-Mid Corporate Market business.
In this role, Birchall will be responsible for generating new 401(k) plan business and building key distribution relationships within the Pennsylvania territory. He will be working through all channels including wire houses, banks, independents and third-party administrators (TPAs) that serve employers with plans up to $75 million in assets.
Joining Voya in 2014, Birchall was involved with the onboarding of new business until most recently, where he has been supporting retirement sales efforts internally in Windsor, Connecticut.
Birchall attended the University of Connecticut where he received a bachelor’s degree in industrial organizational psychology and a minor in economics. He holds his Series 6, 63 and State Licenses. He will be relocating to Pennsylvania and reports to Chris Ekstrom, senior vice president of Sales for Voya Retirement’s northeast region.
Cohen & Steers CIO Joins Board of Directors
Cohen & Steers, Inc. has added Joseph Harvey, president and chief investment officer, to the company’s board of directors, effective August 1.
Robert Steers, chief executive officer, commented on behalf of the Board of Directors, “Joe’s extensive experience and knowledge of our business, culture, investment process and our unique approach to active management will be an invaluable asset to the Board.”
Over his 27-year tenure with Cohen & Steers, Harvey has been instrumental in sharpening the company’s investment process and business strategy, the firm says. He joined Cohen & Steers in 1992 as a REIT analyst, was elevated to to portfolio manager in 1998, and has served as the firm’s president and chief investment officer since 2003.
Custodia Adds Former Pfizer HR Chief to Advisory Council
Custodia Financial has appointed Chuck Hill,former chief human resource officer of Pfizer Inc., to its Strategic Advisory Council (SAC). In his role on the SAC, Hill will support distribution efforts for Retirement Loan Eraser across his broad network of senior human resources (HR) executives and industry practitioners.
While at Pfizer, Hill was responsible for all enterprise human resource programs, including compensation and benefits.
He joined Pfizer’s human resources (HR) team in 1987, supporting the Pharmaceutical Sales Force. After that, he held a number of roles including HR director of Pfizer’s Global Manufacturing facility in Groton, Connecticut; vice president of HR, Corporate Finance; and senior vice president HR, Worldwide Biopharmaceuticals Businesses. Prior to joining Pfizer, Hill served for eight years in the United States Air Force as an instructor fighter pilot and flight commander. He served as the executive sponsor of the Pfizer Colleague Council, Veterans in Pfizer, which works to maximize the unique role that veterans and active military personnel play in driving workplace and marketplace outcomes.
“Having a former CHRO and plan sponsor with Chuck’s experience, network, and values on the SAC is imperative for Custodia and for the employers we serve,” says Tod Ruble, CEO of Custodia Financial. “Chuck understands from years of experience the goals, challenges, and risks that large plan sponsors face, so his voice on the SAC—and advocacy in the marketplace—will be invaluable.”
“Upon learning about Custodia’s mission, I felt drawn to the critically important work that Tod and the team are doing. Preventing leakage caused by loan defaults is a challenge that should be on every large plan sponsor’s radar,” says Hill. “I’m thrilled to be working with the Custodia team to raise awareness among HR executives that Retirement Loan Eraser is an effective solution that automatically improves employees’ retirement outcomes, while minimizing fiduciary risk.”
IRS Names Leader for Tax Exempt/Government Entities Division
The Internal Revenue Service (IRS) has selected Tamera Ripperda to lead the Tax Exempt and Government Entities (TE/GE) division.
In TE/GE, Ripperda will take over as commissioner for Sunita Lough, who will become the IRS deputy commissioner for Services and Enforcement on September 1. TE/GE oversees issues including exempt organizations, employee plans and government entities.
“Tammy brings a variety of skills and expertise to the diverse set of programs overseen by TE/GE,” Rettig said. “She has a strong record of successfully handling critical programs and working closely with people inside and outside the IRS.”
Ripperda became SB/SE Deputy Commissioner in 2016. During this period, she spent 14 months as a director in the Tax Reform Implementation Office (TRIO) where she helped oversee the implementation of the Tax Cuts and Jobs Act (TCJA) of 2017. Prior to 2016, Tammy was the Director of TE/GE Exempt Organizations (EO), where she oversaw tax administration and policy for 1.6 million exempt organizations, and held other positions.
“TE/GE plays a critical role serving key areas for the nation, ranging from tax-exempt groups and retirement plans to Indian tribal governments and tax-exempt bonds,” Ripperda said. “I look forward to working with our TE/GE employees and partner groups to continue finding ways to serve these important communities.”
Tammy began her IRS career in 1988 as a Revenue Agent in St. Louis. She has a bachelor’s degree in accountancy from Southern Illinois University.
