March 2014
Q
Volume 9, Issue 1
This issue and future issues of The Quality Forum will include a new section, “Spotlight on Service.”
The articles will focus on the unique technology, processes, and training approaches that service centers are using to differentiate themselves from others and to improve the customer experience. In this issue, we will focus on one service provider’s unique approach to improving transaction processing accuracy and ef fi ciency.
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T he quality ‘optimizer’ was developed by Putnam Investments’ Mutual Fund Shareholder
Services (MFSS) division as part of a holistic approach to improving the accuracy and efficiency of transaction processing. “We continually look for innovative approaches to improving our service quality and client experience,” says Michael Woodall, Head of MFSS. Putnam’s approach features optimization of the sample rate for quality review, identification and trending of the root cause of errors, and individual performance management.
Building on a third-party provider’s workflow platform, Putnam developed an inventive tool to sample transactions for quality review. Called an optimizer, this tool automatically forecasts each processor’s future accuracy by transaction type. With an objective of realizing the lowest sampling rate while identifying the maximum potential errors, the tool determines which associates are sampled and at what rate for each transaction. The optimizer allows Putnam to set a desired overall sampling rate based on a target accuracy result or by available resources. Sampled work is reviewed the same day that it is processed, permitting errors to be corrected before reaching the customer. Putnam is confident that, as a result, its service quality is continually optimized.
To help support the optimizer by enhancing the accuracy of data fed into it, Putnam also developed robust quality review tools. During the quality review process, a quality control associate assigns a code(s) to any errors. These detailed codes identify not only the specific incorrect data-entry field
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Spotlight on Service: The Quality ‘Optimizer’ . . . . . . . . . . . . . . . . . . . . . .1
Permitted Aggregation of RMDs Chart . . . . . . . . . . . . . . . . . . . . . . . . . . .3
12-Month Rule Rollover Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
News Clips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-5
Compliance Calendar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
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in the recordkeeping system, but also the underlying nature of the error. Using a third-party software provider’s data visualization tools, Putnam subsequently constructed dashboards and interactive views allowing management to review and focus on trends. As a result, Putnam states that it is able to effect continued process improvement with greater efficiency than with traditional quality management approaches.
To ensure the repeatability of this new quality approach, Putnam developed what it describes as
“robust performance management tools to better support the individual performance feedback and coaching process for line managers.” These tools are designed to be statistically rigorous and to focus on the behaviors that allow Putnam to sustain the processes described above. Associates are able to see detail on their errors, as well as their individual performance and other trends. Putnam indicates that line managers equipped with the tools are better able to customize training and coaching specific to individual associates’ needs. Similarly, associates responsible for quality review receive feedback on their ability to properly identify and remediate errors compared with their peers.
Putnam believes that its innovative approach to quality has resulted in a significant improvement in its transaction processing accuracy as measured by National Quality Review (NQR), while at the same time it has substantially reduced the resource requirement for quality review.
Putnam believes that, by reducing the instances of customer-impacting errors, this relatively new approach has directly enhanced the customer experience, noting that over the past 5 years Putnam’s overall accuracy as measured by their internal quality assurance team has improved from 96.4% to 99.7%.
Beyond the dramatic improvement in transaction processing, Putnam indicates that its approach has allowed the firm to significantly reduce the sample size of transactions requiring quality review.
By applying the targeted sampling model, the number of full-time equivalent associates required to correct the same number of errors has decreased by 35%. In addition, through root cause analysis and performance management, the inherent accuracy of Putnam’s processors has also improved.
In summary, Putnam’s representatives stated that, since implementing the quality optimizer, they sample significantly less work while delivering better performance results. ■ www.nqrinc.com
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1 The rollover is treated as a taxable conversion and, therefore, is disregarded for purposes of the 12-month rule.
2 A rollover during the 2-year holding period, to an account other than another SIMPLE IRA, is treated as a taxable distribution and, therefore, is disregarded for purposes of the 12-month rule.
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2014
The Department of Labor (DOL) has established an ambitious agenda for 2014 that includes the following:
1. Revision of electronic disclosure rules for employer-sponsored retirement plans in order to clarify and protect participant rights.
2. Amendments to the DOL’s regulation governing qualified default investment alternatives
(QDIAs). This regulation provides some relief for plan sponsors/fiduciaries from some fiduciary responsibilities related to participant-directed individual account plans. The final rule is expected in March 2014.
3. Examination of and possible revision of regulations governing Termination of Abandoned
Individual Account Plans, by expanding the scope of individuals eligible to become a
“Qualified Termination Administrator (QTA).” A final rule could be ready by April 2014.
4. Proposal for legislation regarding lifetime income illustrations on participant retirement account statements. Publication is planned for August 2014.
5. Review of brokerage windows in participant-directed individual account retirement plans.
The Employee Benefits Security Administration (EBSA) expects to release a Request for
Information in April 2014.
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During his 2014 State of the Union address, President Barack Obama announced that he had given the
Treasury Department instructions to develop a new retirement savings vehicle geared toward workers who don’t already have an employer-sponsored plan, which apparently includes almost half of US workers.
The President referred to these new retirement savings accounts as “myRAs.”
MyRAs would be similar to Roth IRAs in that contributions would be made with after-tax dollars, which would result in investment gains accumulating tax-free and withdrawals of principal being tax-free. After age 59 ½, even the earnings could be withdrawn tax-free. Funds would be invested in government savings bonds, where retention of principal balance is guaranteed.
Workers could enroll in a myRA as long as their employers agree to participate in the program. Participants can open an account with as little as $25 and can make regular contributions as low as $5. Contributions would be made via payroll deduction, so anyone with direct deposit of his/her paycheck is eligible.
The funds in a myRA would be portable from one employer’s myRA program to another employer’s myRA plan.
Once the funds in a myRA reach $15,000 or the account has been in existence for 30 years (whichever comes first), the account owner would be required to roll his proceeds into a standard Roth IRA.
The government hopes to get the program up and running by the end of 2014 with a pilot group of employers.
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On January 2, 2014, the Internal Revenue Service (IRS) issued Revenue Procedure 2014-6, which updates the procedures for plan sponsors seeking retirement plan determination letters. The release outlines the new determination submission requirements, sets realistic expectations for the submission cycle, and discusses the user fee program. The revenue procedures also include information on prototype and volume submitter programs for 403(b) plans. ■
April 1
April 15
April 15
April 15
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Required Beginning Date for participants attaining age 70 ½ or retiring after age
70 ½ in 2013. Date by which retirement account owners/participants must take first Required Minimum Distribution (RMD).
Date by which excess contributions need to be removed from IRAs in order to avoid the 6% excise tax (unless the taxpayer is on extension to October 15).
Date by which contributions must be made to Traditional IRAs in order to be deductible for 2013 (extension to file Form 1040 does not apply). Postmark Rule applies.
Date by which 402(g) distributions of excess deferral amounts due to plan participants must be made.
Date by which taxpayer requests for extension of filing deadline for federal returns to October 15 must be received by the IRS.
Editor: Patricia D. Jones, Director of Compliance
Published by: National Quality Review
Summer Exchange Building, Suite 50, 101 Arch Street, Boston, MA 02110-1155
This publication is designed to provide accurate, but general, information in regard to the subject matter. This publication should not be construed as legal, tax, or other business advice.
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