JH Signature 2.0, effective in May 2014, not only expands its revenue-sharing allocation solution to plans from startups to $10 million in assets, but it uses John Hancock’s “required revenue” concept to establish pricing for a particular plan based on just what is needed for that plan, independent from a plan sponsor’s fund lineup or what participants invest in, Peter Gordon, president at John Hancock Retirement Plan Services in Boston, tells PLANADVISER.
Gordon explains that John Hancock launched its JH Enterprise solution for plans with $10 million in assets and greater as a way to ensure all revenue sharing was credited back to participants’ account balances, instead of using an ERISA (Employee Retirement Income Security Act ) account in which payments are credited to the plan and allocated to participants via a variety of methods. This is intuitive, Gordon contends. “Intuitively, you would expect credits to go back to participants invested in the fund that pays revenue sharing, and not that what someone else does in the plan would affect participants getting those funds back.”
John Hancock carries that same concept to JH Signature 2.0, which focuses on plans from startup to $10 million in assets. In addition, the solution applies individual pricing to the less-than-$20 million market by looking at the demographics of a particular plan and charging a customized price—a concept Gordon says is usually associated with larger plans. “If we charge ‘x’ basis points for a plan, the plan sponsor can choose fund lineup ‘A’ or ‘B’ and the price would be the same. Participants are also paying what they intuitively would expect,” he adds.
The intuitiveness of the solution will make fee disclosures for plan sponsors and participants easier to understand, according to Gordon. “A lot of what we do is hard to explain to the average employee who is not in the retirement business, but with this solution, we can show them charges, credits and net fees,” he says.
“At the very core of it, that is the point, making disclosures more intuitive,” Gordon concludes.