Products March 8, 2007

Two New Funds From John Hancock

John Hancock Funds has announced the launch of two new funds available to investors through financial advisers.
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The two funds are the John Hancock Global Shareholder Yield Fund, and the John Hancock Classic Value Mega Cap Fund. The former will be provided with portfolio management services by Epoch Investment Partners, Inc., a New York-based institutional asset manager, through an exclusive sub-advisory agreement. The primary objective of the fund is to seek to provide a high level of income with capital appreciation as a secondary objective.
The John Hancock Classic Value Mega Cap Fund is sub-advised by Pzena Investment Management LLC, a New York-based institutional asset manager. Pzena presently manages approximately $9.3 billion in Classic Value portfolios as sub-adviser to the John Hancock Classic Value Fund and Classic Value Fund II, and to the John Hancock International Classic Value Fund. Pzena Investment Management, founded in 1995, currently manages more than $27.3 billion in assets for institutional clients.
Fund Objectives
According to a press release, the Global Shareholder Yield Fund will seek to achieve its objective by investing in a diversified portfolio of companies located throughout the world, including the United States, that have a history of attractive dividend yields and positive growth in free cash flow. The philosophy behind the fund is predicated on the belief that the price-earnings expansion that drove the stock market in the 1980s and 1990s when interest rates were trending lower will not play as significant a role in the future. The fund’s managers believe that a focus on investing in companies that look to maximize “Shareholder Yield,” broadly defined as dividend payouts, stock buy-backs and debt reduction, may deliver performance that is superior to that of broad-based equity markets.
The John Hancock Classic Value Mega Cap Fund seeks long-term growth of capital by typically investing most of its assets in domestic equity securities. Pzena chooses these securities from a universe of the largest 250 publicly traded U.S. companies with market capitalizations greater than $15 billion, according to a press release.
“Valuations at the larger end of the market are very attractive, making this an opportune time to launch the portfolio,” said Andrew Arnott, Vice President and head of product management and development for John Hancock Funds. “The new Classic Value Mega Cap Fund is closest in approach to the original Classic Value, which is closed to new investors, and so Classic Value Mega Cap is now the only way retail clients can access Pzena’s institutional asset management expertise in a concentrated domestic portfolio.”
In Practice March 7, 2007

Managing the RFP Process

A provider search is often one of the most time consuming parts of a client relationship.
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That was the counsel of panelists Mike Finnegan of Wachovia Securities, LLC and Craig Rosenthal, from PLANSPONSOR Pathfinder at the 401(k) SUMMIT last week.

Discovery

The basic groundwork for a provider search is laid during the discovery process, when advisers gather information about the plan, its features, and the plan sponsor’s need. This can be made much easier when advisers use forms and a series of questionnaires to ensure they gather the proper information about the client. “This is where your expertise in the industry is valuable,’ Rosenthal said.
The discovery should be properly documented, so that later in the search, if a plan sponsor asks why you are looking at a particular feature, the adviser can reference those early discovery notes, Finnegan commented. During this process, Finnegan said advisers should engage the plan sponsor to give examples of how they may have tried to address plan issues previously.

The Search

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Once an adviser is hired to do a search, it is vital that the process is handled effectively. That was the counsel of panelists Mike Finnegan of Wachovia Securities, LLC and Craig Rosenthal, from PLANSPONSOR Pathfinder at the 401(k) SUMMIT last week.
Once the discovery is over, it is time to begin the search. Finnegan suggested that before getting started on a search, every adviser should know what his “walk away” is; how much money is too little or time too much that this isn’t a profitable venture. That decision needs to be based on the size of the plan, as well as the methodology for the search and the adviser’s personal revenue needs. When originally pricing the search, Finnegan said, it is important try to leave some leeway, because inevitably things will come up and often you will be asked to do more than you anticipated.
There are many tools and instruments available to help with the RFP process, but the most important thing is that no matter what an adviser uses, the process is properly organized, Rosenthal said. Before evaluating the possible plan, advisers can review with their client the criteria that will be used in completing the search process, Finnegan said.
An adviser can draw up a contract with the plan sponsor that details a timeline that will affect for the plan sponsor and the provider. Finnegan suggested using a double barrel timeline, that has one column of when something is supposed to be completed and by who and then a second column that shows when that task actually was completed.
Sometimes searches are done just to benchmark where a plan is in relationship to others, or perhaps just to see if the fees are fair and advisers will want to be able to offer data about other plans or information about how plans like their client’s are faring in the marketplace, Finnegan said. This is often an area when advisers might want to examine the investments in the plan as well.

Committee Presentation

At the end of the process, an adviser should be able to present the plan sponsor and plan committee with an inverted pyramid that shows how the process started by examining a large group of providers and what was done to end up with those that made it to the finals or the one that was selected as the new provider, Rosenthal explained.
When presenting to the plan committee, quite frequently there will be people with whom the adviser has not worked during the search process, like the CFO or President, present, Finnegan said. They often just want to be heard, he said, so he reiterates the search criteria that was decided at the beginning of the process and ask if anything else needs to be considered before presenting the findings.
Frequently, the provider who wins the bid is not selling, Finnegan said, but is able to convince the plan sponsor they will be a help in running the plan, something that is also often true of plan sponsors selecting advisers to help with the RFP process itself.

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