Retirement Industry People Moves

Past Regional Wholesaler Promoted by John Hancock; Willis Towers Watson Appoints U.S. Head of Asset Management Exchange; Qualified Plans LLC Joins Ascensus TPA Solutions; and more.

Greenspring Wealth Management Transitions to Greenspring Advisors 

In order to connect better with clients, Greenspring Wealth Management has turned into Greenspring Advisors as of January 22.

The change, according to Greenspring, comes after a mid-2017 analysis review where the company gathered feedback and data from employees, partners, clients, vendors and more. While the financial services firm is considered a fiduciary, Greenspring says, “a small but necessary adjustment was needed in the way we tell our story.”

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Given the recent name change, Greenspring says it believes its role as a fiduciary and adviser is better recognized and exemplified.

“By changing our name to Greenspring Advisors, we feel as though we’re simply acknowledging the role we’ve always hoped to earn, and continue to prove ourselves worthy of each and every day–that of a trusted adviser to every single one of our clients,” says the firm in a press release.


BMO Appoints CIO

BMO Wealth Management announced the appointment of Mike Stritch as chief investment officer (CIO). Stritch will continue to serve as senior vice president and national head of investments, supported by Yung Yu Ma, Ph.D., chief investment strategist.

Since 2015, Stritch has led the U.S. Wealth Management investment strategy and a research team of over 30 individuals, including senior professionals across asset classes and industries. Stritch also chairs the Personal Asset Management Committee, and is responsible for setting investment policy and strategy for clients throughout the United States.

“Mike’s extensive experience in investments will enable us to continue delivering industry-leading insights and driving our investment strategy forward,” says Darrel Hackett, president, BMO Wealth Management U.S. “Our strong investment team under Mike’s leadership is poised to continue guiding our clients and serving as an essential partner to all their investment matters.”

As chief investment officer, Stritch replaces Jack Ablin who plans to pursue other interests in the private equity space. His tenure will come to an end at the end of January.


Stritch joined BMO in 2013 and previously held the role of managing director of Investments for CTC | myCFO, the Ultra High Net Worth group within BMO Wealth Management. He is a Chartered Financial Analyst, and a member of the Beta Gamma Sigma International Honor Society, CFA Institute, CFA Society of Chicago, and the Chicago Quantitative Alliance. Stritch earned a Bachelor of Arts in Economics from Northwestern University and a Master of Business Administration with distinction in Finance and Decision Sciences from the J.L. Kellogg Graduate School of Management at Northwestern University.


The Standard Hires Former Financial Adviser as Retirement Plan Consultant

 

The Standard hired Brian Armstrong as retirement plan consultant for its East Sales Region. He is based in The Standard’s Tampa, Florida, retirement plans sales and service office.

Armstrong has 20 years of experience in the financial services and insurance industry, specializing in retirement plans. Prior to joining The Standard, he worked as a regional sales consultant for United Retirement Plan Consultants. He has held positions with other retirement industry leaders that included regional vice president, retirement plans regional sales manager and sales director. He has also worked as a financial adviser. 

“Brian comes to us with deep experience in retirement plan consulting and sales. He has spent years helping financial advisers build their retirement plan practices and has worked as an adviser himself,” says Mark Bransford, director of The Standard’s East Sales Region. “He’ll bring expertise, collaboration and insights to our adviser partners and their plan sponsor clients.”

Brian graduated from Illinois State University with a Bachelor of Science in business administration. He holds FINRA Series 7, 66 and 63 licenses.

Past Regional Wholesaler Promoted by John Hancock

John Hancock Retirement Plan Services (JHRPS) promoted Mark Lowbridge, CFP, CKP, to divisional vice president of Business Development. In this role, he is responsible for leading a team of business development directors who support regional vice presidents and serve key broker dealer relationships nationally. He reports to George Revoir, senior vice president of Distribution, and Bob Carroll, national sales manager.

Having begun his John Hancock career as a regional wholesaler in the annuity division in 2006, Lowbridge joined JHRPS in 2010 as director, Field Sales, responsible for working with one of John Hancock’s significant broker dealer partners, launching JHRPS’ CE program, developing presentations and serving as a national spokesperson, simplifying the topic of retirement plans for advisers. Previously he had worked in financial services as an adviser and later a producing complex sales manager. Prior to that, Lowbridge served in the U.S. Army during the first Gulf War.

“Over the past four years our business development director (BDD) program has grown and become an integral part of our career progression, sales success and a significant leverage point for RVP teams,” says Revoir. “With his leadership and national coverage approach to broker dealer support, top down relationship management with broker dealer field influencers and execution on our CE strategy, Mark is ideal to take the BDD program to the next level.” 

VALIC Names Vice President for Midwest Region

VALIC has named Tom Stephenitch as vice president, Business Development, for the Midwest Region. Stephenitch will work closely with plan sponsors, advisers and consultants in Ohio, Kentucky, Michigan and Indiana to secure new group relationships for VALIC. He will report to Glenn Harris, executive vice president, VALIC.

“We are working tirelessly to enhance every aspect of our business–from plan participant services to plan sponsor support to cutting-edge technology and a continued focus on our powerful adviser team,” says Harris. “Recruiting top talent to focus on Business Development is just one of many ways VALIC is positioning itself to be the retirement plan provider of choice.”  

Stephenitch joins VALIC from Transamerica Retirement Solutions where he served as regional vice president, Institutional Markets, focusing on defined benefit (DB), defined contribution (DC) and non-qualified retirement plans in higher education and health care markets. He previously served as director and regional manager at John Hancock. He began his career at Empower. Stephenitch earned his Bachelor’s Degree from Ohio State University.

Willis Towers Watson Appoints U.S. Head of Asset Management Exchange

The Asset Management Exchange (AMX), launched last year by Willis Towers Watson, appointed Kimberley West as U.S. head. In this newly created position, West will have overall responsibility for leading the expansion of the exchange in the U.S. 

Based in New York, West will report directly to Oliver Jaegemann, global head of AMX. West has over 25 years of asset and investment management experience. Prior to joining AMX, she spent two years at Blackrock as a managing director and lead product strategist for its active equity division. She also worked at J.P. Morgan for 12 years where she held various senior-level management positions across asset classes.

“AMX is transforming the institutional investment market, and I am confident that Kimberley’s experience and proven track record will help ensure the exchange is tailored to the unique needs of U.S. investors,” says Jaegemann. “We look forward to engaging with both asset owners and managers alike across the U.S. and, in the future, across a wider global reach.”

Duff & Phelps Adds to ESOP/ERISA Advisory Services Practice

Duff & Phelps has added three new managing directors to its Corporate Finance practice.

Danielle Montesano has joined in the Corporate Finance and ESOP/ERISA Advisory Services practice and is based in the Chicago office. She holds more than 20 years of experience working with corporate acquisition and sale transactions involving restructuring, valuing and financing public and private securities. She has expertise in matters involving corporate governance, valuation, Employee Retirement Income Security Act (ERISA), tax, compliance, executive compensation and employer securities. Prior to joining Duff & Phelps, Montesano was the head of the Fiduciary Advisory Group at First Bankers Trust Services. 

Kurt Steltenpohl has joined in the firm’s Transaction Advisory Services (TAS) practice and is based in the New York office. He has served as a consultant to industry executives, corporations and private equity on strategy and operations. Steltenpohl specializes in performance improvement and merger integration in the consumer, industrial, and health care sectors and leads TAS’ Operations Advisory vertical, providing the firm’s clients with pre- and post-transaction services. He joins Duff & Phelps from Alvarez & Marsal, where he served as a strategy and transactions adviser in that firm’s Private Equity Services Group. 

“Each of these professionals will enhance our practice in a distinct way,” says Bob Bartell, managing director and global head of Corporate Finance at Duff & Phelps. “Danielle’s ESOP/ERISA experience will be immensely beneficial to our Transaction Opinions practice. Kurt’s strategy and operations improvement experience deepens our service offerings. We welcome them to the team and look forward to their contributions.”

Qualified Plans LLC Joins Ascensus TPA Solutions Amid Acquisition

Ascensus has entered into an agreement to acquire Qualified Plans LLC (Qualified Plans).

The third-party administration (TPA) firm will immediately become part of Ascensus TPA Solutions.   

Headquartered in Savannah, Georgia, Qualified Plans provides plan design, consultation, compliance, and administration services for defined contribution (DC) and defined benefit (DB) plans. The firm’s relationship managers, who average over 20 years of industry experience, oversee every aspect of the retirement planning operation to ensure that plans are as efficient and effective as possible.

“Acquiring Qualified Plans to become part of our TPA Solutions business is another indication of Ascensus’ ongoing commitment to providing high-quality solutions to advisors through a platform-independent, open-architecture business model,” says David Musto, Ascensus’ president. “Qualified Plans’ dedication to outstanding client service makes them a solid addition to Ascensus—we welcome their associates and their expertise in delivering efficient and high-quality plan retirement plans along with administration and actuarial services to our family.”

Self-Dealing Lawsuit Targeting Capital Group Routed in District Court

In a dense dismissal decision, the district court offers a reminder of the exacting pleading standards of ERISA and statues of limitations before roundly rejecting the plaintiff's allegations for failing to state an actionable claim. 

The U.S. District Court for the Central District of California has dismissed a self-dealing Employee Retirement Income Security Act (ERISA) lawsuit alleging fiduciary violations and prohibited transactions on the part of Capital Group and its subsidiaries.

The lawsuit alleged various violations in Capital Group’s selecting, retaining and failing to remove what plaintiffs called “expensive affiliated investment options in its retirement plan that generated significant revenue for Capital Group and its subsidiaries.” The fiduciary violations were alleged to have occurred through the present, with the proposed class period starting June 13, 2011.    

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Named as defendants in the lawsuit were The Capital Group Companies, Inc., the Board of Directors of Capital Group, the U.S. Retirement Benefits Committee of the plan, Capital Guardian Trust Company (CGTC), Capital Research and Management Company (CRMC) and Capital International, Inc. (CII).

With the new opinion, the district court seeks to make clear where the line is when it comes to pleading standards in ERISA lawsuits. As the decision states, “Federal Rule of Civil Procedure 8(a)(2) requires only a short and plain statement of the claim showing that the pleader is entitled to relief. Specific facts are not necessary; the statement need only give the defendant fair notice of what the claim is and the grounds upon which it rests, per Erickson v. Pardus. But Rule 8 requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do, per Bell Atlantic Corp. v. Twombly.”

The court further points out that the Federal Rule of Civil Procedure 12(b)(6) “allows an attack on the pleadings for failure to state a claim upon which relief can be granted.”

“When ruling on a defendant’s motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint,” the court explains, again citing Erickson. “However, a court is not bound to accept as true a legal conclusion couched as a factual allegation, per Ashcroft v. Iqbal. Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement.”

The real point here is that a complaint must state a claim for relief that is plausible on its face. This means that the complaint must plead factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Offering further context, the decision states the “plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.”

The clarification continues, citing Twombly: “Ruling on a motion to dismiss is a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not shown—that the pleader is entitled to relief.”

Considering the timeliness of the claims  

With this context set up, the decision pauses to consider precedence set by the groundbreaking case of Tibble vs. Edison, pulling in helpful guidance regarding the application of various statutes of limitation under ERISA.

“Plaintiff claims defendants were disloyal in selecting, retaining, and failing to remove unduly expensive Capital Group-affiliated investment options and permitting plan participants to invest in the more expensive R5 share class, despite the availability of the cheaper R6 share class, because R5 allegedly generated substantial revenue for defendants. Plaintiff’s imprudence claim relies on substantially similar reasoning,” the court notes. “Plaintiff also alleges she had no knowledge of all material facts necessary to understand that defendants engaged in unlawful conduct in violation of ERISA. Thus, plaintiff contends that ERISA §1113(a)(1) applies and her claims are timely.”

Defendants argued that plaintiff’s “blanket disavowal” here is “insufficient to demonstrate a lack of actual knowledge because she received regular fee disclosure statements that made her aware of the allegedly expensive fees.” However, in Tibble v. Edison, the United States Court of Appeals for the Ninth Circuit held that such disclosures were “evidence of the wrong type of knowledge” for a claim alleging the defendant made an imprudent investment. Rather, the “actual knowledge” standard requires “some knowledge of how the fiduciary selected” the allegedly imprudent investment.

The court then explains its finding that the complaint is, at least in part, timely: “Here, as in Tibble, plaintiff’s claims are based on allegations that defendants continuously made disloyal and imprudent decisions relating to the funds. Plaintiff did not have actual knowledge of defendants’ process for selecting and retaining the investment options. Accordingly, § 1113(1) applies and each new breach by defendants begins a new limitations period. And plaintiff alleges the plan did not switch to R6 share classes until 2014 and the fees charged were unduly expensive even after the switch. Accordingly, Plaintiff’s first and second claims are timely.”

The plaintiff’s third and fourth claims allege Capital Group violated ERISA’s prohibition against certain self-interested transactions by charging excessive fees on the Capital Group-affiliated investment options, leading to a windfall for defendants. But the court is more skeptical here: “Unlike her fiduciary duty claims, plaintiff had actual knowledge regarding her prohibited transaction claims. For her third and fourth claims, the underlying violation is the collection of fees from Capital Group-affiliated funds. Here, plaintiff knew defendants had caused the plan to engage in self-interested transactions when the plan included Capital Group-affiliated funds. Several of the investment options named in the first amended complaint are clearly affiliated with Capital Group. Plaintiff also knew that those investment options extract fees. With the exception of three funds, defendants’ selection of the investment options and initial collection of fees occurred outside of the three-year limitations period.”

The plaintiff argued that each new collection of fees started a new limitations period, making her third and fourth claims timely. But “when there is a series of ‘discrete but related breaches,’ the § 1113(2) limitations period does not begin anew with each related breach. Accordingly, plaintiff’s third and fourth claims are time-barred except as they relate to the CG Emerging Markets Growth Fund, the American Funds Developing World Growth and Income Fund, and the American Funds 2060 Target Date Retirement Fund.”

Heart of the decision

With the timeliness questions settled, the court states the real core of its choice to dismiss the lawsuit.

“Courts have routinely held that a fiduciary’s failure to offer the cheapest investment option is not enough by itself to state a claim for a breach of fiduciary duty,” the decision states. “The fact that it is possible that some other funds might have had even lower expense ratios is beside the point; nothing in ERISA requires every fiduciary to scour the market to find and offer the cheapest possible fund. … As the Ninth Circuit has stated, there are simply too many relevant considerations for a fiduciary, for that bright-line approach to prudence to be tenable. Rather, plaintiffs must plead some other grounds to plausibly suggest wrongdoing.”

Here, plaintiff’s claim for breach of the fiduciary duty is premised on high fees, including defendant’s failure to switch investment options from R5 to the cheaper R6 share classes, and the fact that the vast majority of the plan options were proprietary funds. Again the court is skeptical: “Plaintiff’s present allegations … are not sufficiently plausible to survive a motion to dismiss. It may not be necessary for plaintiff to allege that the challenged funds underperformed, but plaintiff must at least allege facts that plausibly suggest the fees were unjustified. That defendants ‘could’ have chosen funds with lower fees, that ‘similar’ Vanguard funds charged lower fees, and that all or most of the challenged funds were defendants’ own financial products are insufficient, when viewed in context, to create a plausible inference of wrongdoing. Although a motion to dismiss is not the place for the court to find fees reasonable (or excessive) as a matter of law, the fees alleged here are not so obviously excessive as to meet the plausibility test standing alone.”

According to the text of the decision, the plaintiff’s allegation that, for most of the challenged funds, defendants failed to switch the plan from the more expensive R5 share class to the less expensive R6 share class does not bolster her claim. In Braden, the United States Court of Appeals for the Eighth Circuit considered similar allegations with one key difference—the plaintiff in Braden alleged that both share classes had the same return on investment and differed only in price.

“Plaintiff here makes no such allegations,” the decision notes. “She alleges only that the R6 share class was cheaper and defendants could have switched share classes earlier.”

Also interesting, as explained above, the plaintiff’s third and fourth claims alleging that defendants engaged in prohibited transactions are time-barred except as to a small number of funds. But defendants also contend the claims should be dismissed because the transactions are exempt under the “prohibited transaction exemption 77-3.” The plaintiff countered that PTE 77-3 does not apply because her prohibited transaction claims concern the collection of fees, not the sale of the mutual funds at issue. The court on this point is “not persuaded” and again sides with defendants. 

Additional dismissed claims are discussed in detail in the full dismissal decision, available here.

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