PSNC 2011: Building a Better Retirement Plan Menu

A panel at the PLANSPONSOR National Conference discussed best practices for building a better retirement plan investment menu.

“Investment decisions for your retirement plan start and stop with the investment policy statement,” says Michael Maresh, financial adviser, The Maresh Yoshida 401k Group.  The IPS should dictate the type and number of funds as well as when funds should be terminated.  

Brett Howell, a wealth management adviser with The Howell & Sharp Group at Merrill Lynch, suggests sponsors first understand who their employees are and put forth a mission statement for their plan.  

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Craig Keim, VP, and Director of Defined Contribution Relationship Management, T. Rowe Price Retirement Plan Services, advises that sponsors should make sure they are offering enough funds to satisfy requirements of Section 404(c) of the Employee Retirement Income Security Act, but also should ask themselves how many funds they want to deal with administratively.  

Howell says sponsors can diversify by choosing funds that do uniquely different things. Maresh added that sponsors should get rid of redundancy, i.e. getting rid of funds in the same category, such as large cap growth. 

Concerning monitoring funds, Brian Pietrangelo, Managing Director, Retirement Investment Services, Charles Schwab, told attendees that if they make a promise in the IPS, such as the investment committee will meet quarterly, they need to keep that promise.  

According to Keim, other than performance, sponsors should look at fees and revenue sharing, and they should be mindful of other share classes that may be cheaper.  

When looking at performance, Maresh says sponsors should use broad criteria in the IPS, look back three to five years. When putting funds on a watch list to be terminated, sponsors should give funds at least a year to improve.  

He notes that over time, for funds in the same share class, performance will be similar, so expenses are key in monitoring.

Great-West Enhancing Distribution Solutions

Great-West Life & Annuity Insurance Company is launching a retirement planning and education program to assist workers when they are eligible to take distributions from their plans at retirement or when leaving their employers. 

Sam Ghazaleh, a 12-year veteran of Fidelity Investments, has been appointed to head the program. He will report to Bob Shaw, executive vice president of Individual Markets.   

“We’re building an education resource center, further improving our IRA and retirement planning offerings, and adding new functionality to our distribution process,” said Mitchell Graye, president and CEO of Great-West.  

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Ghazaleh spent more than twelve years in a variety of executive roles in Fidelity Investments’ Retirement Services business, and brings experience as a former executive of Rollover Systems and a management consultant. He served for five years as an Air Force officer as well.He graduated from Duke University with bachelor’s degree in electrical engineering and earned his MBA from the Wharton School at the University of Pennsylvania.  

Great-West developed the “Distribution Education” program to provide retirement plan participants with personal counseling regarding distribution options when they are preparing to leave their plans, including the ability to roll over their account balance into the new Great-West Lifetime Advantage IRA Solution. 

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