Deals & People July 7, 2014

LPL and Financial Telesis Create New RIA Firm

LPL Financial reached a partnership agreement with Financial Telesis and Bill Chetney, former LPL Retirement Partners president, to create a new retirement plan advisory firm known as Global Retirement Partners.
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Chetney becomes CEO and partner at the new firm, which will team with LPL’s Hybrid RIA platform. Financial Telesis’s founder and CEO, Jim Williams, will join Global Retirement Partners as president to help manage the day-to-day operations of the new registered investment adviser (RIA) firm and to serve as manager of the newly formed LPL large-enterprise organization.

“Adding Global Retirement Partners as a new large LPL enterprise is another important step forward for LPL Financial in the retirement plan industry,” says LPL Financial President Robert Moore. “This new business venture is structured to ensure that numerous plan sponsors and their clients will benefit from strategic thinking on retirement plan services, including in-plan advice.”

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David Reich has been named executive vice president and head of LPL Retirement Partners, and independent adviser services strategy as part of the deal. He will report to Bill Morrissey, managing director of independent adviser services. Prior to joining LPL Retirement Partners in 2011, Reich served as vice president of retirement strategies and solutions for Ameriprise Financial.

In 2010, LPL Financial acquired certain assets of National Retirement Partners (NRP), which was founded and led by Chetney (see “NRP Becomes New Division of LPL”). NRP offered retirement plan services to thousands of employers nationwide and the transaction provided LPL Financial with a new opportunity to assist advisers in the U.S. who focus on retirement consulting, according to the firm.

Williams says the new partnership and formation of Global Retirement Partners should create an opportunity for up to 400 Financial Telesis licensed associates to access client services available through LPL Financial. 

The business venture is expected to close within the third quarter of 2014. Global Retirement Partners will be based in San Rafael, California.

Compliance July 7, 2014

GAO Recommends Changes to Form 5500

The Government Accountability Office (GAO) is recommending that regulators consider modifying Form 5500 plan investment and service provider fee information.
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Stakeholders interviewed by the agency said the form’s information about service provider fees was misaligned with other required fee disclosures, and also cited various exceptions and gaps in current reporting requirements as major challenges. Specifically, the stakeholders said Form 5500 service provider fee information does not align with other information that service providers must disclose to plan sponsors, forcing providers to produce two different sets of information.

Also, differences in service provider compensation types and the lack of definitions for codes designating the types of services provided can result in inconsistent and incomplete data being reported. Other exceptions and gaps in service provider information result in an incomplete picture of plan fees. For example, large plans—those with 100 or more participants—are not required to report fee information for certain types of compensation and small plans file only limited fee information.

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The Form 5500, filed annually by retirement plans subject to the Employee Retirement Income Security Act (ERISA), is the primary means of collecting information for use by the federal government and the private sector about retirement plan information and assets, GAO noted. The agency found weaknesses in the format of the form, challenges in finding key information and inconsistent data.

Specifically, plan asset categories break out plan assets differently from the investment industry, and provide little insight into plan investments, their structure, or the level of associated risk, GAO said. In particular, the majority of stakeholders GAO surveyed indicated that the “other” plan asset category in the form is too broad because it can include many disparate types of investments. Respondents also indicated challenges in identifying the underlying holdings of plan assets invested in indirect investments.

GAO said the form lacks detailed information about plan investments because there is no structured, data-searchable format for attachments to the form and the filing requirements about plan investments is limited for small plans. In addition, GAO’s survey found naming conventions and identification numbers may be inconsistent, making it difficult to collect and accurately match records.

The GAO said the Department of Labor (DOL), Treasury and the Pension Benefit Guaranty Corporation (PBGC) should look for options to conduct advance testing when making major revisions to the form. Stakeholder input could lower costs by reducing subsequent changes, improve filer comprehension, and increase the comparability and reliability of the form’s data. Additionally, the GAO noted a statutory prohibition against requiring electronic filing caused Treasury to remove certain data elements from the Form 5500 after DOL mandated electronic filing of the form. If Treasury were able to require electronic filing, it could add the data elements back to the form, which would improve its compliance, restore robust information to its enforcement activities, and decrease its data collection costs.

The full report may be downloaded from http://www.gao.gov/products/GAO-14-441. 

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