ADDENDUM: 2009 401(K) BUYER’S GUIDE
Providers A – Z
ADP Retirement Services
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
While ADP Retirement Services is not an investment advisor and does not provide investment advice, we have
received inquiries regarding the market downturn and its effect on participant balances. We have reiterated the
importance of a diversified portfolio, but explained that even a diversified portfolio cannot completely insulate
participants from losses in the extraordinary economic conditions that we are experiencing.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
ADP Retirement Services is not an investment advisor and does not provide investment advice to participants.
We have, however, developed educational workshops and support materials to address current market
challenges. Topics include the importance of asset allocation, dealing with market volatility, and understanding
fund information. These educational materials are made available to plan sponsors and their employees in a
variety of ways by our relationship managers and education specialists.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
While ADP Retirement Services does not provide legal or investment advice to plan sponsors, we do provide
comprehensive educational tools and materials that explain the fiduciary concerns and responsibilities of plan
sponsors.
4. How has your company's 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
ADP Retirement Services does not provide investment advice to plan participants. Our 404(c)-related materials
are intended to address the requirements of the 404(c) regulations. No changes have been made to these
materials in specific response to the market downturn.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
ADP has a comprehensive fund-screening and due-diligence process for the selection of investment alternatives
made available to our clients on our investment platform. We are constantly reviewing the procedures used in
our investment process and adjusting them accordingly. No specific changes to this process have been made
based solely on the market downturn.
Regulatory Action Disclosures
1. Is your company involved in litigation regarding fees, fee disclosures, or revenue sharing? No
Does your company intend to change its policies regarding these issues?
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ADP Retirement Services, Regulatory Action Disclosures, cont.
We are currently reviewing our policies in light of recent proposed regulations regarding fee disclosure. We will
modify our policies and procedures as required to meet any future change in law regarding fee disclosure.
American United Life Insurance
Response to 2008 Market Meltdown
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
As always, we encourage participants to be active with their accounts by viewing them online and taking
advantage of the tools available to them through our Account Services Website.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
We offer Plan Sponsor Advice through Ibbotson Associates, and a managed-account option through ProNVest.
If the plan sponsor elects, both options offer fiduciary protection for the assets placed with OneAmerica.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
We continue to offer over 200 investment options from multiple fund families. We have a rigid screening
process and have evaluations of funds available for plan sponsor to review.
Ascensus
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
While Ascensus does not provide investment-management services, we did work with our financial partners to
deliver various messages during the broadly turbulent markets. Employers were provided with talking points
about the financial markets and how they could handle participant inquiries.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
Ascensus believes the fundamentals of investing continue to hold even in these uncertain times—understand
your risk characteristics, develop a plan, invest in a well-diversified portfolio, rebalance your portfolio as
necessary, and get solid investment advice from a professional. Our service model, communications, and Web
tools reinforce these fundamentals and offer participants the options to work with a financial professional for
advice.
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Ascensus, Response to 2008 Market Meltdown, cont.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
Plan sponsors will have greater comfort and less risk if they provide adequate employee education and
communication materials, and work with their financial advisors to offer a diversified investment line-up in
their retirement plans. Ascensus provides education tools, an open-architecture investment platform, and the
ability for plan sponsors to work with trusted investment advisors, thus enabling plan sponsors to meet these
important goals.
4. How has your company's 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
During 2008, Ascensus broadened the educational materials available on its participant Website to help
participants develop more-targeted and personal investment decisions. Our education material has always
covered the topic of risk and ways to minimize risk through diversification and other fundamental investment
principles. The participant can check his personal investment performance on the Website any day, and detailed
performance information is available on quarterly participant statements. In addition, we have targeted
communication materials that help participants understand how their investment strategy could be improved to
help them meet their retirement goals.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
Ascensus offers an open-architecture investment platform that allows for plan sponsors, working with their
trusted investment advisor, to select funds they feel are appropriate for their plans.
AXA Equitable Life Insurance
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
Because virtually all major asset classes except investment-grade bonds declined in 2008, some investors may
question whether diversification and asset allocation still work. We believe this thinking is short-sighted
because one difficult year does not undo decades of successful experience. Even in 2008, there were signs that
diversification was still working. The past year has demonstrated an opportunity to expand the asset classes that
a well-diversified portfolio can encompass. At AXA Equitable, we are working to introduce enhancements to
help investors access more strategies, investment styles, and lower-cost choices. We believe the real test of
successful investing is the ability to learn from difficult times and adapt to a changing environment, while
continuing to stay focused on time-tested fundamental concepts that are as valid and valuable today as ever.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
We provide participants with educational information on diversification, asset allocation, and dollar-cost
averaging. Under ERISA, we do not provide specific investment advice.
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 3 of 41
BB&T Institutional Services
Call-center service: How well have the centers performed?
For 2008, our call center met all of the service-standard requirements, averaging a service level of 94% and a
speed-of-answer time of 25 seconds. Call-center capacity and response times are strictly monitored to ensure
quality client service. Minimum service-level standards of our call center include:
•
<30 seconds average speed of answer
•
<5% call abandonment rate
•
Callbacks from voicemail messages are made by the end of the same business day
•
Calls are logged daily and monitored randomly by supervisory personnel to ensure transactions and
information requests are handled within a 24-hour time frame.
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
Through the economic downturn, BB&T has maintained a long-term investment strategy within the Defined
Contribution Plan arena, and diversified portfolios were created in accordance with that strategy. The balanced
nature of the portfolios is designed to reduce the risk of loss due to the devaluation of one particular asset class.
We have explained to participants that it is possible for equity and fixed-income markets to simultaneously
deteriorate in unique economic crises, such as the one we face now. We consistently explain to participants the
short-term volatility that is inherent in investing in these markets, and always disclose the risks associated with
investing. Despite the market declines, diversified portfolios have reduced losses for many participants who
may have otherwise held an all-equity portfolio. We have encouraged participants to continue investing and to
use dollar-cost averaging to their advantage.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
BB&T maintains a proactive stance in communicating industry trends, economic data, and financial news
related to retirement planning to all participants who utilize our services. We have been committed to offering
customized education meetings to primarily or solely discuss recent market volatility and its effects on
retirement-plan assets. We have created and used additional slides in our standard enrollment presentation to
address market volatility. We have also created and distributed a communication piece called “Investing in a
Down Market” that has been well received by plan sponsors and participants alike.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
We work with the plan sponsor to develop a comprehensive Investment Policy Statement that helps to ensure
that a diversified, broad range of investment classes is offered to participants, in order to minimize the overall
risk of the participants’ portfolios. The IPS helps protect the plan sponsor from losses and participant lawsuits,
as it establishes an act of due diligence on the part of the plan sponsor. The IPS signifies that the plan sponsor
has done what is necessary to choose the best investments available to the plan.
4. How has your company’s 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 4 of 41
BB&T Institutional Services, Response to 2008 Market Meltdown, cont.
We continue to monitor 404(c) requirements and provisions by providing plan sponsors with a 404(c)
Compliance Audit Checklist and the following services:
•
SPDs are provided to participants, serving as notice that the plan is intended to be a 404(c) plan and
that fiduciaries may be relieved of liability from participants directing their own investments.
•
Communication materials and current fund fact sheets are provided to eligible employees.
•
Our participant enrollment booklets provide plan highlights, fund data, strategies for success,
retirement worksheets, and plan-specific forms.
•
Account Access Brochures provide participants with instructions on making investment changes
within their account through the VRS or PlanTrac.
•
Online access to account data, fund performance, detailed investment-option data, account values, and
prospectuses are provided to participants through PlanTrac and to sponsors through SponsorLink.
•
A prospectus for each fund is available at participant meetings and at any time upon request.
Prospectuses are available through PlanTrac and SponsorLink.
•
Quarterly statements provide participants with information on account values, investment performance,
and personalized rates of return. Participants may view online account snapshots via PlanTrac.
•
A BB&T consultant will work with the plan sponsor to develop a comprehensive IPS to ensure that a
diversified, broad range of investment classes is offered to participants.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
BB&T maintains a proactive stance in communicating industry trends, economic data, and financial news
related to retirement planning to all participants who utilize our services. In uncertain times, it is critical to relay
pertinent information to participants immediately to assist them in making sensible, calculated decisions
regarding their retirement planning. On the participant level, we have been committed to offering customized
education meetings to primarily or solely discuss recent market volatility and its effects on retirement-plan
assets. We have created and used additional slides in our standard enrollment presentation to address market
volatility. We have also created and distributed a communication piece called “Investing in a Down Market”
that has been well received by plan sponsors and participants alike.
401(k) Services
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
•
Upgraded our recordkeeping system to improve internal operating efficiencies
•
Expanded our Secure Website for data uploads and downloads
•
Expanded PIN length for security
•
Upgraded the plan-sponsor Website with a new look/feel and added functionality
•
Added online employee education and asset-allocation modeling calculators to our Website
•
Established automatic-contribution arrangements
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 5 of 41
BB&T Institutional Services, 401(k) Services, cont.
•
Made the Employee Benefit Network accessible through our participant and sponsor Websites. EBN
provides access to plan information, fund fact sheets, prospectuses, beneficiary forms, and retirementplanning tools.
•
Enabled access to online management reports via a secure website
Charles Schwab
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
We provide our clients with extensive support and information regarding investments. Please contact your
Schwab representative directly, or contact us at 877-456-0777 for detailed information.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
We provide our clients with extensive support and information regarding investments. Please contact your
Schwab representative directly, or contact us at 877-456-0777 for detailed information.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
We provide our clients with extensive support and information regarding investments. Please contact your
Schwab representative directly, or contact us at 877-456-0777 for detailed information.
4. How has your company's 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
We provide our clients with extensive support and information regarding investments. Please contact your
Schwab representative directly, or contact us at 877-456-0777 for detailed information.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
We provide our clients with extensive support and information regarding investments. Please contact your
Schwab representative directly, or contact us at 877-456-0777 for detailed information.
401(k) Services
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
We are continually enhancing and adding services and system functionality based on legislation, client requests,
and industry trends. Over the past year, we’ve made the following available to clients:
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
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Charles Schwab, 401(k) Services, cont.
•
Custom Allocation Fund/Model Portfolio Enhancements: Schwab offers plan sponsors multiple ways
to establish sponsor-directed (or advisor-directed) investment options or model portfolios;
enhancements built upon the existing offering to enrich the experience for plan participants.
•
Plan-Sponsor Reporting Enhancements: Made additional plan-demographic information available for
analysis, provided the capability to access and view custom reports/documents produced by our service
teams, and expanded e-mail notifications and home-page alerts to indicate report availability
•
Website Enhancements: Redesigned schwabplan.com, adding content that enables faster and easier
access to more key information
•
Enhanced Invalid Address Handling: Improved identification and handling of suspect participant
addresses to suppress/re-route mailed correspondence, encourage action from participants, and provide
accurate reporting to the plan sponsors
Regulatory Action Disclosures
2. Has the company been investigated or are you being investigated for any issues by any outside
agencies? Yes
Due to the diverse nature and size of its business, The Charles Schwab Corp., its banking subsidiary Charles
Schwab Bank (of which Charles Schwab Trust Co. is a division), and its various other subsidiaries (including
Charles Schwab & Co. Inc.; the registered broker-dealer, Schwab Retirement Plan Services Inc.; and The
401[k] Co. Inc.) are routinely subjected to claims, lawsuits, arbitrations, regulatory examinations and requests
for information, and other proceedings in the ordinary course of its business. Most of such proceedings involve
businesses other than Schwab Retirement Plan Services Inc., The 401(k) Co., and Charles Schwab Trust Co.,
and no such proceedings are currently pending with respect to retirement plans services.
3. Has the company been involved or are you involved in any ethical investigations? No
Due to the diverse nature and size of its business, The Charles Schwab Corp., its banking subsidiary Charles
Schwab Bank (of which Charles Schwab Trust Co. is a division), and its various other subsidiaries (including
Charles Schwab & Co. Inc.; the registered broker-dealer, Schwab Retirement Plan Services Inc.; and The
401[k] Co. Inc.) are routinely subjected to claims, lawsuits, arbitrations, regulatory examinations and requests
for information, and other proceedings in the ordinary course of its business. Most of such proceedings involve
businesses other than Schwab Retirement Plan Services Inc., The 401(k) Co., and Charles Schwab Trust Co.,
and no such proceedings are currently pending with respect to retirement plans services.
CPI Qualified Plan Consultants
401(k) Services
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
CPI created a new system, the Auditor’s Toolbox, that provides access to all of the information an auditor needs
to perform a retirement-plan audit. CPI also added five new fund families to its investment platform.
Distribution processes were also enhanced to provide automatic e-mail status updates to terminated employees.
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 7 of 41
Diversified Investment Advisors
Call-center service: How well have the centers performed?
In Chatham Survey’s recent client-satisfaction analysis, Diversified outperformed all competitors in these
categories related to call-center representatives: overall satisfaction, process transactions on a timely basis,
process transactions accurately, respond to questions accurately.
ExpertPlan
401(k) Services
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
We acquired Actuarial Enterprises Inc., a full-service actuarial firm providing document design,
recommendations, participant enrollment, and government filings. This acquisition expanded our product
offering to include defined-benefit and insurance-based products, in addition to our core defined-contributionplan administrative and recordkeeping services. We also acquired Trust Services Co. Inc., a provider of trust
and employee-benefit software to banks, insurance companies, third-party administrators, brokerage firms,
private employers, and others needing asset-management and retirement-benefits recordkeeping systems. These
acquisitions have brought value-added services to our partners and clients through the addition of retirement
experts from both companies.
The capabilities of ExpertPlan’s recordkeeping system include automatic disbursement for forfeiture accounts,
exception processing for distributions, a defined-benefit offering, a Trust Services platform, and workflow
management. In addition, ExpertPlan added all PPA 2006 requirements, including Automatic Contribution
Accounts, Eligible Contribution Accounts, Qualified Automatic Contribution Acccounts, and Qualified Default
Investment Alternatives.
Fifth Third Institutional Services
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
We explained that in a rare market downturn to the extreme we experienced in 2008, it is very challenging, even
with diversified portfolios, to escape negative returns in portfolios. We stand by our philosophy that
diversification is an effective way to mitigate risk.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
In this unpredictable economic climate, Fifth Third is committed to working as hard as ever to help turn
participants’ dreams into reality, and to help guard them every step of the way. We offer clear, useful guidance
and tips designed to address the uneasiness participants may have right now about their personal finances.
Guidance and tips might include the fact that plan assets are held in trust beyond the reach of creditors, the
promotion of sensible behavior over panicked reactions, the importance of diversification and the need to
review asset-allocation strategies, the importance of dollar-cost averaging and taking advantage of cheaper
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Page 8 of 41
Fifth Third Institutional Services, Response to 2008 Market Meltdown, cont.
stocks as the market declines, and avoiding trying to time the market. And, although the desire to reassure
participants may be strong, it is our goal to remain factual and impartial.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
At Fifth Third, we are committed to providing plan sponsors with the tools and information necessary to meet
their fiduciary obligations. Final Qualified Default Investment Alternative (QDIA) regulations provide plan
sponsors a roadmap to guide them in the selection of a default investment option. Plan sponsors must meet six
conditions in order to rely upon the fiduciary relief provided by ERISA §404(c)(5):
1.
Qualified Default Investment Alternative
The assets must be invested in a QDIA.
2.
Participant Investment Election Opportunity
The participants whose assets are invested in a QDIA must have been given an opportunity to, and
must have failed to, direct the investment of their assets.
3.
Notice Requirements
Plan sponsors must provide timely advance notice of the default-investment arrangement, as well as
annual notices to participants prior to the beginning of each subsequent plan year.
4.
QDIA Materials
Certain QDIA materials available to the plan sponsor must be provided to participants defaulted into a
QDIA. These materials should contain the same information a plan choosing to satisfy §404(c) is
required to provide to participants who do make investment selections, including a fund prospectus on
or immediately after the first contribution is invested in the QDIA.
5.
Transfers out of the QDIA Must Be Allowed Without Penalty
Participants must be permitted to transfer their QDIA assets to any other investment option available
under the plan. Transfers must be allowed as frequently as other plan participants may make
investment changes, and at least once during any three month period. Transfers and withdrawals must
be free of any restrictions, fees, or expenses except investment management and similar fees during the
first 90 days.
6.
Broad Range of Investment Options
The plan must offer participants the opportunity to invest in a “broad range of investment alternatives”
as described in ERISA §404(c).
4. How has your company’s 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
We have not made any changes to our 404(c) education and materials reflective of the 2008 meltdown.
However, we created new material to address and shed light on the events that led to the meltdown.
401(k) Services
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
•
Improved testing and IRS Form 5500 year-end reporting
•
Enhanced functionality on participant and plan-sponsor Websites
•
Created initiatives to improve the overall customer experience
•
Launched EGTRRA restatement project
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 9 of 41
First Mercantile
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
Numerous pieces were created during the course of the economic difficulties to remind participants that rash
decisions about their participation and investment decisions were not the best action. All financial decisions
should be carefully considered with a long-term focus.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
Education, education, education. Nothing is going to eliminate lawsuits and disgruntled participants. However,
we encourage our clients to make sure education is available and that it is documented.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
None. One of our strengths over the years has been that we have a strong group of analysts who are literally
monitoring the investments offered on our platform daily. This stringent due diligence is designed to allow our
clients to be comfortable with the funds we offer.
401(k) Services
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
During the last year we have totally redesigned our participant statements. The focus was to streamline the
statement into a user-friendly, easy-to-follow communication that supplies the desired information. In addition,
we redesigned our participant Website to allow for improved navigation and new functionality. We also
expanded our QDIA capabilities by building functionality to allow for age-based defaults. Finally, we have
redesigned our fund fact sheets and fund performance evaluation reports.
Great-West Retirement Services
Response to 2008 Market Meltdown
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
Great-West Retirement Services’ educational materials communicate the importance of maintaining diversified
retirement investments and sticking with a long-term plan through market cycles. When markets are volatile, it
is helpful to keep sight of what has not changed: you are pursuing a comfortable and secure retirement, and
Great-West Retirement Services is committed to helping you reach your goals.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
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Page 10 of 41
Great-West Retirement Services, Response to 2008 Market Meltdown, cont.
None. Over a long period of time, our companies have maintained prudent and conservative investment policies
and practices with respect to the management of our consolidated assets. We continue to follow these prudent
and conservative investment policies and practices today.
The Hartford
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
The Hartford continues to work with both sponsors and participants to support their communication needs
during this time of unprecedented market volatility. Many of our communications continue to reinforce the
importance of understanding core investment fundamentals, asset allocation, dollar-cost averaging, and overall
retirement-planning concepts.
Additionally, we created a variety of new communications, such as the Crisis to Confidence educational series,
which is available in print, online, or delivered in person by one of our nationally located, bi-lingual educational
specialists.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
The Hartford continues to work with both sponsors and participants to support their communication needs
during this time of unprecedented market volatility. Many of our communications continue to reinforce the
importance of understanding core investment fundamentals, asset allocation, dollar-cost averaging, and overall
retirement-planning concepts.
Additionally, we created a variety of new communications, such as the Crisis to Confidence educational series,
which is available in print, online, or delivered in person by one of our nationally located, bi-lingual educational
specialists.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
We encourage plan sponsors more than ever to engage their financial advisors and/or their Hartford
representative to conduct periodic educational seminars for participants. Additionally, we offer an optional
third-party co-fiduciary service through Mesirow Financial, at no additional fee to the sponsor, to support the
investment selection and ongoing monitoring process in support of their fiduciary obligations.
4. How has your company’s 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
See response #2, above. In addition to a broad suite of educational materials, we created the Crisis to
Confidence series.
Regulatory Action Disclosures
2. Has the company been investigated or are you being investigated for any issues by any outside
agencies?
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Page 11 of 41
The Hartford, Regulatory Action Disclosures, cont.
Any material information regarding litigation matters affecting the company may be found in our Annual
Report, annual SEC 10-K filing, and quarterly SEC 10-Q filings. Our Annual Report and SEC filings may be
viewed by visiting our Investor Relations Website at http://ir.thehartford.com.
3. Has the company been involved or are you involved in any ethical investigations?
Any material information regarding litigation matters affecting the company may be found in our Annual
Report, annual SEC 10-K filing, and quarterly SEC 10-Q filings. Our Annual Report and SEC filings may be
viewed by visiting our Investor Relations Website at http://ir.thehartford.com.
Ingham Retirement Group
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
In past market cycles, when one asset class went down, another went up to balance it out, which is the essence
of the importance of diversification. However, since this decline was driven by credit problems related to public
companies that are the backbone of global equity and fixed-income markets, all asset classes declined with the
exception of treasuries. Nevertheless, experiencing an interim atypical market cycle should not deter
participants from the proven long-term results of diversification, as retirement planning is meant for the long
haul. While significant losses occurred in diversified portfolios, losses could have been much greater in
accounts that were much less diversified.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
We encourage all participants to examine their individual goals and risk profile by reviewing our “Simple
Approach to Retirement Planning” brochure and taking the Risk Quiz. This Risk Quiz guides them to a
particular professionally developed, diversified asset–allocated strategy that is in line with their personal risk
tolerance and time horizon. We have also stressed the importance of diversification to all participants. We
believe strongly that in the long run, diversifying by asset class, sector, geography, etc. helps to diminish risk
and smooth out overall portfolio returns. We remind participants that planning for retirement is a long-term
process, requiring them to remain disciplined and focused. Also, our participants have been advised to contact
our Participant Service Center for help and can be transferred to one of our Investment Advisors for more
specific information regarding their investments. We have also reached out to our plan sponsors, and increased
education and informational seminars.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
From the beginning stages of our relationships with clients, we provide them with a customized Investment
Policy Statement (IPS) tailored to their plan. We believe liability of the fiduciary is determined by whether
prudent investment practices are followed, not by investment performance. The IPS is designed to help the
investment committee develop prudent practices to monitor, supervise, and evaluate the management of the
retirement plan in an effort to help protect them from potential liability. In addition, we provide our plan
sponsors with pamphlets, like “Prudent Practices for Investment Stewards,” and “Self-Assessment of Fiduciary
Excellence for Investment Stewards (SAFE),” published by Fiduciary360, an organization whose mission is to
promote a culture of fiduciary responsibility and improve the decision-making process of investment
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Ingham Retirement Group, Response to 2008 Market Meltdown, cont.
fiduciaries. These pamphlets assist the investment committee’s management of their fiduciary responsibilities
and improve their long-term performance in agreement with global practices. We believe our clients to be in a
better position to protect themselves regardless of market conditions when they act in accordance with these
guidelines. We communicate with plan sponsors quarterly to review all funds relative to the IPS, as well as
make recommendations that we feel are prudent.
4. How has your company’s 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
At our educational and enrollment meetings, we review PowerPoint presentations that discuss market events.
Our presentations feature slides detailing market cycles, focusing on long-term returns, investor emotions, and
life stages. We compliment our presentations with published articles on our Website that pertain to market
volatility, to keep clients informed and address their concerns. Our most recent article discusses how to manage
market volatility by giving a historical market perspective, and emphasizing the importance of diversification,
individual goals, and our professional guidance. We try to communicate to employees that, while they should be
aware of recent events, they should most importantly focus on their own personal strategies and long-term
goals.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
We have always had due-diligence processes established in accordance with our IPS and fiduciary guidelines
that help monitor and evaluate each investment. We review, monitor, and report recommendations on each
investment in our clients’ plans at least on a quarterly basis. Annually, Ingham undergoes third-party audits to
evaluate and improve our firm and practices. Our investment advisory services and administrative services are
certified through the Center for Fiduciary Excellence (CEFEX), and our TPA undergoes an annual SAS 70
audit.
J.P. Morgan Retirement Plan Services
Call-center service: How well have the centers performed?
To capture continuous feedback about our Retirement Service Center, each week 1,000 participants are
randomly selected to participate in a survey regarding their experiences. In 2008, 80% of the participants
surveyed experienced above-average satisfaction with the following phone representative attributes:
1.
Answered the phone call in an acceptable amount of time
2.
Had the expertise to take care of what you called about
3.
Took time to answer all of your questions
4.
Communicated in a friendly manner
5.
Was knowledgeable about your retirement plans
6.
Treated you as a valued customer
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 13 of 41
J.P. Morgan Retirement Plan Services, Response to 2008 Market Meltdown, cont.
J.P. Morgan Retirement Plan Services has communicated to participants that these are extraordinary market
conditions we are experiencing, where an understanding of the situation and a calm, level approach is
necessary. Although the current market conditions are unsettling, they are not unprecedented. The stock market
has a long history of ups and downs. And, while no one can accurately predict which direction an individual’s
investments are headed, history shows that the stock market has produced gains over the long term. For
example, the Standard & Poor’s 500 Stock Index has had positive returns in every 10-year period in the past 50
years.1 Stocks have returned, on average, 10.2% during the last 77 years.2 Therefore, we believe it is important
to keep long-term goals, save regularly, diversify, and avoid timing the markets.
1
2
Based on month-end rates of return. Source: Ibbotson Associates
December 31, 1925, to December 31, 2007. Source: Ibbotson Associates
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
Our message continues to focus on saving, using dollar-cost averaging, avoiding timing the market, and
diversifying your investments. Even when the markets are down, continue to save. Saving over time allows for
the potential of dollar-cost averaging. By making regular contributions to your retirement plan, you are using
dollar-cost averaging, which means that when the market is high, you buy fewer shares and when the market is
down, you buy more shares. Typically, the average cost per share will be lower than the average price per share.
No one, not even the “experts,” can predict with certainty which investments will go up and which will go
down. The cost of guessing wrong can be very high, causing an investor to miss the best periods of return,
which can occur at unexpected times in any market cycle. Spread investments among stocks, bonds, and capital
preservation products and diversify within each of those asset classes. While diversification does not assure a
profit or protect against loss of principal, it can help reduce overall volatility and reduce the risk of a single
devastating loss.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
One of J.P. Morgan Retirement Plan Services’ top priorities is to help plan sponsors understand their fiduciary
responsibilities by providing tools, analysis, and frequent communications that guide them through the issues
and concerns inherit to our industry. The senior leadership of our firm and our client-relationship managers
remain in frequent contact with our clients to keep them up-to-date on current events and how those events may
impact the benefits those clients provide to their employees. While the discussion with each client is different
based on its unique situation, we continue to use principles we believe are best practices in our industry for
guiding plan sponsors through these difficult times. One of the tools we have created to help clients meet their
fiduciary responsibilities during good and bad times is our Building the Best Plan in America strategic
consulting framework. This framework around plan administration helps plan sponsors evaluate plan design,
administration, communications, funding, and investments according to industry best practices. We also use
proprietary tools to help plan sponsors meet their fiduciary responsibilities, such as the Fiduciary Toolkit, Value
Benchmark, Investment Policy Statements, statistical analysis, and quarterly plan reviews (including the plan’s
investment choices and performance).
4. How has your company’s 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
We use participant communications to reinforce positive saving and investing behaviors. We have added
context to our communication materials to help educate participants about the current market environment. Our
messages are empathetic in language and delivery, both in print and in-person communications. We focus on
topics about coping with tough economic times and “riding out the storm.” We have renewed “back to the
basics” messages, which include tips to retire on track, confirming retirement objectives, time horizon to
retirement, and risk tolerance. We work to help participants understand basic investing principles such as:
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 14 of 41
J.P. Morgan Retirement Plan Services, Response to 2008 Market Meltdown, cont.
1.
Diversify your investments to balance your portfolio based on your age and risk tolerance.
2.
Regularly save for retirement and take full advantage of employer matching contributions.
3.
Avoid taking money out of your retirement account prior to retirement.
4.
Save the maximum amount allowable each year.
5.
Avoid timing the market as saving for retirement is a long-term objective.
6.
Each year, evaluate your portfolio, the time you have left to retirement, and your risk tolerance, then
adjust your savings rate and investment allocation to help ensure you will meet your retirement savings
goal.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
J.P. Morgan Retirement Plan Services has always encouraged stringent due diligence and/or investment
processes in evaluating investments offered to our clients. All investment products, both proprietary and nonproprietary, are subject to the same screening process. We employ a policy of open-architecture that allows us
to offer most investment vehicles that clients request for their plans. We apply a rigorous screening process that
includes both quantitative and qualitative measures. Our quantitative screening process begins with analyzing
Lipper data and includes a focus on people, process, and performance. We also conduct further research that
includes, but is not limited to, evaluating Morningstar rankings, returns and holdings-based analysis,
risk/reward relationship, upside/downside capture charts, and rolling information ratio over time. In addition,
we apply a qualitative assessment that is expansive and includes different criteria relevant to a specific asset
class. We maintain open lines of communication with portfolio managers to review our process and ask probing
questions to assess our level of comfort with each fund offered to our clients.
401(k) Services
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
We completed the following enhancements to our defined-contribution services in 2008:
•
Updated fund performance to FINRA standards and added fund-specific disclosures on the participant
Website
•
As a part of our multi-factor authentication security upgrade, we now require authentication of a
participant’s Username, Password, and computer on the participant Website. We also added the ability
for participants to set a communication preference via e-mail or phone number.
•
Added ability for participants to open Chase Investment Services Corp. (CISC) self-directed brokerage
accounts and IRAs online
•
Added multimedia features such as podcasts, audiocasts, and flash presentations on the participant
Website
•
Added a “Go Green” icon to encourage participants using paper statements to adopt online-only
statements
•
Enhanced the plan-sponsor Website reporting engine to facilitate more efficient reporting
4. Is your company owned by, does it own, or is it an affiliate of a company(ies) that advises 401(k)
plans?
If yes, which one?
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 15 of 41
J.P. Morgan Retirement Plan Services, 401(k) Services, cont.
J.P. Morgan Asset Management provides asset management and private banking services to institutions, highnet-worth individuals, and retail investors. J.P. Morgan Asset Management includes three groups: Private
Banking, Private Client Services, and J.P. Morgan Investment Management, which includes J.P. Morgan
Retirement Plan Services. These businesses offer a broad array of products and services, including private
banking, investment and asset-management products and services, alternative assets, trust services, and
financial-planning services.
J.P. Morgan Institutional Investments provides advice services to certain plan participants as an investment
advisor and uses Financial Engines as the sub-advisor. When JPMII provides these services, it enters into a
separate agreement with a plan sponsor under which it serves as a fiduciary and an investment manager under
ERISA regarding the investment advice it provides to participants using the services. For the online advice
service, JPMII provides investment recommendations to participants, and participants decide whether to apply
those recommendations to their plan accounts. For the managed-account service, the participant authorizes
JPMII to direct the investment allocation of his or her plan account and JPMII provides investmentmanagement services.
Lord, Abbett
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
Lord, Abbett provides 401(k) participants the ‘Lord, Abbett Insights’ with each quarterly participant statement.
The general theme of ‘Insights’ is to provide relevant market and economic commentary, Q&A with senior
Lord, Abbett partners and portfolio managers, and other timely articles. The ‘Insights’ that was included with
the 12/31/2008 statements addressed the state of the market at that time and included articles titled “Time in the
Market Better than Timing the Market” and ‘Think Carefully Before Changing your 401(k).”
Marshall & Ilsley Trust
401(k) Services
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
Recent enhancements to our retirement-services program have included:
•
Prospectus delivery (participants elect to have documents delivered to them via a Web link)
•
Link to summary plan description on participant Website
•
Participant e-mail notification of statement availability
•
On-line access to pension-benefit payments
•
Data warehousing (access to all management and operation reports via the plan-sponsor Website and
the ability to customize those reports)
•
MasteryPOINT Advice Plus!/Guidance Plus! (a comprehensive module for participants to perform
sophisticated retirement projections and deliver specific investment advice on-line for participants)
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 16 of 41
Marshall & Ilsley Trust, 401(k) Services, cont.
•
Organization of a client advisory council
•
Enhancement to a participant-only Website for account access (www.miretirement.com)
Enhancements currently in progress:
•
Enhanced fiduciary investment reporting via automated reports delivered by e-mail in full color/pdf
format
•
Automated rollover solution
•
Link to administrative manual on plan-sponsor Website
•
Establishing a weekend conversion process
•
Establish eligibility determination standards and contingencies
•
OmniPlus recordkeeping upgrade to Version 5.75
•
Document-imaging capabilities
•
Producing projection gap-analysis statements
MBM Advisers
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
First, we have never told participants that diversified portfolios will protect them from market meltdowns. In
fact, we tell them there is no protection from these rare but cyclical occurrences. We explain diversification, and
that includes cash as well as stocks and bonds. Most people overestimate their risk tolerance and thus we spend
a great deal of time working with participants on their real ability to take risk. We have instructed most folks to
continue to save and to stick with an appropriate risk budget given their circumstances.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
We do not believe any of our plan sponsors are exposed. And, MBM Advisers acts as the plan’s investment
fiduciary in addition to the plan’s TPA. As an SEC-registered adviser, as well as a TPA, we sign on with each
client for the duty of selecting, monitoring, and educating the participants. We meet with the sponsor regularly
to review the policy statement and each option, both quantitatively and qualitatively. MBM also brings dynamic
asset allocation to our plan sponsors, who believe that strategic allocations no longer provide real diversification
in globally interlinked markets.
Mercer
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 17 of 41
Mercer, Response to 2008 Market Meltdown, cont.
While diversification remains a solid long-term investment strategy, the benefit of holding a portfolio of
minimally correlated assets does not always hold true. One of these instances occurred in the last half of 2008,
as investors focused their attention on escalating global financial concerns that eventually resulted in one of the
most challenging periods of economic growth in the past century. Market reaction generally fell into two camps.
Asset classes with any perceived notion of risk (i.e. global equities, fixed-income spread sectors, real estate,
commodities, etc.) fell dramatically in unison, while asset classes with little or no perceived notion of risk (i.e.
government-related debt—Treasuries, agencies, government-sponsored agency debt, etc.) rose in unison. Under
normal market conditions, a wider variety of factors tend to influence returns, which has, over time, resulted in
a set of less-correlated return patterns between asset classes.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
In light of recent market volatility, we have continued to reinforce key principles of investing for participants,
such as the importance of maintaining a diversified portfolio and dollar-cost averaging. We have also
communicated the importance of viewing their 401(k) account as a long-term investment vehicle and therefore
have encouraged participants to establish their own personal strategy, based on their risk tolerance, objectives,
and time horizon. By having a long-term strategy and a diversified portfolio, participants should be better able
to weather the market’s ups and downs. We have encouraged participants to continue contributing and not to
make any rash decisions in light of the market’s volatility.
To assist participants during these challenging economic times, we have created a special “Market Updates”
section on plan Websites to help educate participants and provide strategies for managing their 401(k) accounts
in volatile market conditions.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
As part of its normal course of business of working with plan sponsors, Mercer discusses a variety of ideas
related to assisting its participants with reaching their retirement goals. From an investment-offering standpoint,
some of our clients have added and/or are currently considering adding additional fixed-income options and/or
annuities to their lineup. In addition, we encourage our plan sponsors to continuously monitor their investment
offerings versus a set of clearly stated objectives and to keep themselves informed about fees and expenses
associated with their investments.
4. How has your company’s 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
Our participant-education materials really haven’t changed, as we have always encouraged participants to view
their 401(k) plans as long-term retirement-savings vehicles, regardless of market conditions. We continue to
educate participants on the importance of building and maintaining diversified portfolios to help them weather
market volatility. In addition to diversification, our educational materials also explain dollar-cost averaging.
These materials are intended to be independent of any of the requirements of Section 404(c).
As mentioned above, we have created a section on our plan Website to house relevant educational materials to
help participants through today’s economy. This section is designed to make it easy for participants to find
resources to answer their questions on market conditions and the potential impact on 401(k) accounts.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
We have spent a significant amount of time monitoring the investment process and policies, portfolio
exposures, and holdings within stable-value funds and within investment-manager securities lending cash
collateral pools.
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 18 of 41
Merrill Lynch Retirement Group
Call-center service: How well have the centers performed?
In December, the Retirement Group’s call centers were recognized for excellence in customer satisfaction under
the J.D. Power and Associates Certified Call Center Program for the fifth consecutive year (2005–2009).
According to an evaluation by the global marketing information services firm, the call-center operation has a
strong commitment to providing an outstanding customer-service experience.
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
We reminded participants of the following: No one can predict the direction of the markets with any degree of
consistency, because there are too many variables. Psychology can drive markets in either direction—so can
global events, shifts in economic growth, interest rates, and inflation. Most downturns are short-lived, but some
have lasted for several years. Yet, history shows that stocks and bonds have typically delivered solid results
over the long term. Investors who ride out the ups and downs may have a better chance of coming out ahead.
Investors who have a strategy for asset allocation have an anchor when volatility kicks up. And investors who
look for opportunity in a volatile market may be surprised to find themselves in the right place at the right time
for the next market cycle.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
We reminded participants of the following: While market volatility is unsettling, it is nothing new. There have
been several dramatic drops in the past 50 years—most recently the dot-com bubble that burst in 2000. In the
long run, equity investments have historically continued to grow, and sometimes recover within a year or two of
a decline. That’s why it is important to take a long-term perspective in a declining market: If you panic when
you’re in the eye of the storm, you may miss out on the positive environment on the other side. A few wellknown principles of investing may help you cope with market up and downs: (1) diversify; (2) consider possible
opportunities in the market’s weakness; and (3) respect your risk tolerance.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
Everything we do from a compliance, education, and disclosure perspective is designed to help our plan
sponsors fulfill their responsibilities. The assistance we provide covers virtually all of a sponsor’s roles,
including helping them meet their fiduciary responsibilities. Among the many services we provide are
regulatory updates, a Form 5500 preparation service, client and participant education, and updates on feedisclosure regulations and fund-transfer redemption fees. We also follow up with year-end compliance
reminders.
4. How has your company’s 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
We continually update and enhance the materials that we make available to educate individuals. Our
communications library provides a vast array of topics and information on investing, diversification, planning,
dollar-cost averaging, etc. In response to market activities, we have added more content on safety of assets and
volatility. These pieces are available in different formats, from articles to on-demand presentations, so users can
learn about these topics in whichever manner they prefer.
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 19 of 41
Merrill Lynch Retirement Group, Response to 2008 Market Meltdown, cont.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
We have instituted a larger and more concentrated focus on target-date funds. It became apparent to us that last
year’s difficult markets were supposed to be the environment where fully diversified, professionally managed
portfolios outperformed. It quickly evolved into a period where plan sponsors and participants realized that not
all target-date funds are interchangeable. To help our clients differentiate between philosophical differences in
the construction of these diversified portfolios, we have elevated our due diligence on target-date offerings and
increased the amount of guidance we deliver to plan sponsors during their decision-making process.
401(k) Services
1. Has your company merged with or acquired another 401(k) provider in the past year? Yes
If yes, which one(s)?
On January 1, 2009, Bank of America Corp. and Merrill Lynch & Co. Inc. officially joined forces, creating a
leading banking and wealth-management franchise and a premier investment-banking and capital-markets
business.
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
The Retirement Group’s Participant Service Center utilizes Virtual Hold technology to improve the participant
experience during periods of heavy call volume. Virtual Hold offers the following convenient options for
participants:
•
Virtual Hold Concierge: Participants hang up and receive a callback from the next available participant
service representative (PSR). Participants who select this option enter their phone number and hang up,
but do not lose their place in line.
•
Virtual Hold Rendezvous: Participants schedule an appointment for a PSR to return their call.
We also redesigned our participant and plan-sponsor Benefits OnLine Websites. Enhancements include a
stationary navigational tool that:
• Allows participants to add Quick Links to their favorite Web pages
•
Enables plan sponsors to send targeted messages to participants based on profile attributes (e.g., age
50+, highly compensated, deferral rates <2%)
•
Provides easy access to a document center that stores historical confirmations, quarterly statements,
etc.
4. Is your company owned by, does it own, or is it an affiliate of a company(ies) that advises 401(k)
plans? Yes
If yes, which one?
Effective January 1, 2009, Bank of America Corp. acquired Merrill Lynch & Co. Inc. Merrill Lynch, Pierce,
Fenner & Smith Inc. is now a wholly-owned subsidiary of Bank of America Corp.
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 20 of 41
Milliman
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
Due to a largely unprecedented economic and market convergence, all equity classes and certain fixed-income
instruments were affected across nearly all sectors globally.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
Milliman has distributed several communication pieces to participants regarding appropriate asset-allocation
strategies within the context of previous economic and market downturns. In addition, our proprietary tools and
calculators have been enhanced to assist participants with financial planning as it relates to adequate retirement
income.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
Milliman has consulted with our clients and prospective clients about the need to contain risk related to their
qualified and nonqualified plans. This has largely centered around conducting fiduciary audits on not only
investments but also fees, compliance, plan operations, and education.
4. How has your company’s 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
It has changed, but only with respect to addressing the current economic situation. Milliman’s standard
education and communication materials are very participant friendly and we routinely receive very positive
feedback on the content.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
So far, the meltdown has confirmed our conviction to use managers who don’t chase market trends, are longterm in their tenure, and who look for quality companies and management relative to buying based purely on a
stock price.
401(k) Services
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
Our Retirement Readiness Tool enables our consultants to illustrate the effectiveness of a plan sponsor’s overall
retirement program and provide solutions to achieve desired results.
4. Is your company owned by, does it own, or is it an affiliate of a company(ies) that advises 401(k)
plans? Yes
If yes, which one?
Milliman consults with clients on 401(k) and pension assets. In addition, Evaluation Associates Inc. is a whollyowned subsidiary of Milliman.
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 21 of 41
Nationwide Financial
Call-center service: How well have the centers performed?
Our participant call centers have consistently provided fast and friendly customer service to our participants.
We manage to the industry standard of answering 80% of our calls within 20 seconds. In addition, all of our
representatives have earned Series 6 licenses.
This past October, when calls more than doubled in volume, our call centers were able to answer nearly half of
them within 20 seconds. The average wait time for our participants during this period was less than 2 minutes,
30 seconds.
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
2008 was a year of unprecedented market volatility. In the bear market of 2008, there was almost no safe-haven
for investors.
Domestic stocks, foreign stocks, commodities, bonds, and real estate all suffered significant losses as all of
these asset classes reacted similarly to the credit crisis. Broad-based market declines, like in 2008, are very
unusual, and while diversification isn’t as effective as usual in a broad-based market crash, diversification still
helps.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
Using multiple communication vehicles (including in-person presentations, participant newsletters, and printed
collateral pieces), we encouraged our participants to try to think “long-term” despite the day-to-day market
fluctuations. We reminded them that market swings—even wide ones—are a normal part of investing and that
they should talk to their investment professional to ensure their investment plans are diversified and suit their
retirement goals.
In addition, when participants initially enroll, we ask them to consider whether they have a “do it for me” or an
“I’ll do it myself” investment style (prefer target maturity funds or managed accounts, or prefer a self-directed
brokerage account, respectively). If concerned about potential loss, a participant may look for assistance in a
“do it for me” style investment option.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
Nationwide supports its plan sponsors with a strong fiduciary support system that starts with our Nationwide
Fiduciary Bill of Rights.
In essence, the Bill of Rights states that we stand with our plan sponsors to help them ensure they are doing
what is necessary to ensure their retirement plan meets all fiduciary obligations and helps protect them from
potential lawsuits.
Under our Bill of Rights, our plan sponsors have the right to:
•
Broad, comprehensive fiduciary tools that help them make the right decisions about investments
•
Broad fund selection
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 22 of 41
Nationwide Financial, Response to 2008 Market Meltdown, cont.
•
Offer more choice to their employees without increasing their fiduciary risk
•
Simple, fast, and easy help
•
Choose full protection
In addition, Nationwide supports its plan sponsors with the Nationwide Fiduciary Warranty. When they do their
part to ensure all fiduciary processes are followed, we are there to help in the event their investment decisions
result in participant lawsuits.
4. How has your company’s 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
We currently provide our plan sponsors with several tools to help them understand the fiduciary obligations
involved in sponsoring and maintaining a retirement plan. Key among those resources is The Nationwide
Financial Fiduciary Series, which covers plan sponsors’ ERISA fiduciary obligations. This collection of print
and Web-based resources contains customizable online tools such as:
•
An investment policy statement template, which can help plan sponsors draft a written statement of
guidelines and standards that plan fiduciaries will use when selecting and monitoring a plan’s
investment options and service providers
•
A checklist of requirements that plan fiduciaries follow if the plan is designated as an ERISA Section
404(c) plan
•
A Q&A brochure to assist in communicating retirement-plan information to employees
•
A due-diligence checklist to help ensure plan sponsors are investigating and documenting plan-related
decisions
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
Nationwide is very focused on investment risk management and has historically been a diligent risk manager,
investing in diverse industries, different markets, and various types of securities. While our $65 billion
investment portfolio includes investments that have been negatively affected by the recent credit crisis, we
remain positioned to meet the needs of our customers, employees, and communities.
401(k) Services
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
In September 2008, Nationwide Financial introduced Clear Advantage, a lower-cost retirement plan with no
hidden fees for small businesses. Clear Advantage provides plan sponsors with an up-front discussion on
pricing, which in turn allows each plan to track its true performance and make more-informed decisions. The
new program was designed to get in front of pending fee-disclosure-centered legislation. We didn’t want to wait
for mandates to tell us to do what we know is right and what we know our customers want.
Regulatory Action Disclosures
1. Is your company involved in litigation regarding fees, fee disclosures, or revenue sharing? Yes
Does your company intend to change its policies regarding these issues? No
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 23 of 41
Nationwide Financial, Regulatory Action Disclosures, cont.
Any material litigation is publicly disclosed in the normal course of business. For more information, please visit
the Investor Relations section of our Website at www.nationwide.com. We continually update our business
practices to meet the changing needs of our customers.
2. Has your company been investigated or are you being investigated for any issues by any outside
agencies?
No. At the present time, Nationwide’s 401(k) business is not the subject of any investigations by any outside
agencies. In the normal course of business, Nationwide is subject to routine examinations by outside agencies,
such as state insurance department market-conduct examinations. Any material investigations are publicly
disclosed in the normal course of business. For more information, please visit the Investor Relations section of
our Website at www.nationwide.com.
The Newport Group
Call-center service: How well have the centers performed?
Newport’s plan-sponsor clients consistently give high ratings to our participant call center. It received a “Best in
Class” honor in Plansponsor magazine’s 2008 survey of plan sponsors’ satisfaction with their providers. Calls
are routinely answered in 20 seconds or less, and the call center’s performance rating is consistently higher than
the industry average.
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
Newport provided plan sponsors and participants with a detailed perspective on the unprecedented volatility that
occurred in 2008. In a memorandum distributed to sponsors and participants via Newport’s Websites, chief
investment officer Mendel Melzer provided a thorough explanation of the causes of what he called the “most
profound challenge to our capital-markets system that we’ve seen since the Great Depression.”
The source of the 2008 troubles was that too many financial institutions took on too much debt in order to own
risky securities. When the value of these securities (many backed by home values) declined, the losses to these
financial institutions were magnified by the debt. Now, as institutions try to further reduce their debt, the further
downward pressure being put on asset prices is causing the solvency of financial institutions to be called into
question.
These historic developments have been accompanied by large swings in the market. Retirement plans are
designed to promote the concept of long-term investing. All of the investment-education material Newport
continues to provide speaks to the necessity of investing money in accordance with a participant’s unique risk
tolerance and time horizon.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
In his memorandum, chief investment officer Mendel Melzer reminded participants that history teaches us that
selling in a panic—or letting emotions drive investment decisions—is often a recipe for disappointment. Some
of the most impressive gains in the market have come just after major declines.
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 24 of 41
The Newport Group, Response to 2008 Market Meltdown, cont.
To help participants protect themselves, Newport offers a “snapshot” of their retirement-savings progress. We
can perform gap analyses that project retirement income based on current balances and show participants if they
may fall short of their goal. Participants can then view suggestions to improve their process.
Participant newsletters—distributed each quarter—also provide detailed information designed to assist
participants who may have concerns given recent market developments. For example, our most recent
newsletter featured a comprehensive Q&A on how defined-contribution plans are protected by providers and
government regulations.
Newport’s call-center representatives can answer participant questions and help make sure that participants’
financial plans align with their needs and goals. Additional tools and resources can be found within the
Learning Center on the plan-participant Website (plandestination.com).
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
A sponsor is not responsible for losses to participant accounts if the sponsor followed a prudent process for the
selection and monitoring of the investment alternatives offered under its participant-directed plan.
Newport continues to encourage clients to offer a selection of investments with a broad range of risk and return
characteristics, and to review and monitor the investment alternatives at appropriate intervals. Proper menu
selection is central to meeting the sponsor’s obligations as an ERISA fiduciary and to qualify for the ERISA
404(c) defense. Sponsors that are not sure of their investment responsibilities or capabilities should retain
assistance from a competent adviser.
4. How has your company’s 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
All of the investment-education material Newport continues to provide speaks to the necessity of investing
money in accordance with a participant’s unique risk tolerance and time horizon.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
As a provider of 401(k) plan recordkeeping services, Newport continues to encourage its plan-sponsor clients to
provide a broadly diversified investment menu for their participants.
401(k) Services
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
The following are a sampling of some of our most recent enhancements:
•
Gap Analysis
Newport can create gap analyses—a “snapshot” of retirement savings—for participants, projecting
retirement income based on current balances and showing whether a participant may fall short of the
retirement-income goal. Participants can determine whether or not they are on track to meet their goals
and view suggestions to improve their process.
•
Spanish-Language Website
In addition to its comprehensive features, Newport’s participant Website is also available in Spanish.
Participants simply log on to the site and click the “En Español” link to translate the entire Website
from English to Spanish.
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 25 of 41
The Newport Group, 401(k) Services, cont.
•
Participant Statement Enhancements
Participant statements have been redesigned and include a new personal-rate-of-return graph. Plan
sponsors can also offer participants the ability to “opt out” of receiving paper statements, an ecofriendly approach that allows participants to receive future statements in electronic format online. In
addition, Newport’s Statement On-Demand feature allows a participant to select a date range and
generate an instant statement on the Website.
4. Is your company owned by, does it own, or is it an affiliate of a company(ies) that advises 401(k)
plans?
Yes. Newport’s affiliated company—Newport Group Securities Inc.—is a Registered Investment Adviser and
provides investment consulting services to clients on a stand-alone basis or in conjunction with financial products.
New York Life Retirement Plan Services
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
Despite a challenging market, we still believe that diversified portfolios are a sound investment strategy. New
York Life continues to place an emphasis on providing timely investment updates and market commentaries to
keep investors informed regarding market events and their effect on our investment products. It is a priority to
communicate with participants frequently so that they make appropriate decisions regarding their own risk
tolerance, needs, and time horizon for purposes of retirement planning.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
We believe that retirement planning is a long-term investment process and participants with five years or more
until retirement should continue to invest according to their original investment plans, taking into account
personal circumstances and risk tolerance. We offer a Retirement Consulting Group for terminated
participants/retirees to help them make informed decisions regarding their financial future.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
The recent financial crisis, and the losses relating thereto, emphasize the importance of plan sponsors and plan
fiduciaries complying with the requirements of 404(c). We recommend a 404(c) audit to ensure plan fiduciaries
are in full compliance. In addition, for an overall fiduciary best practice, procedural prudence should be
followed (e.g., fiduciaries should review the relevant facts respecting any decision, consult with a third-party
adviser where appropriate, and document any fiduciary decision made respecting the underlying plan).
Consideration should also be given to providing investment advice at the participant level.
4. How has your company’s 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
The 2008 meltdown has led to the need for greater education for both plan sponsors and participants, and the
need to stress the importance of 404(c) compliance. We are reaching out to sponsors and participants more
proactively and more frequently, and our message is more focused on confirming that we are in a challenging
economic period and on encouraging sponsors/participants to take the long view. We are also taking a back-to-
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 26 of 41
New York Life Retirement Plan Services, Response to 2008 Market Meltdown, cont.
basics approach and reinforcing key messages around the benefits of retirement savings. We take a multimedia
approach to deliver these messages to maximize effectiveness.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
Our investment processes are an outgrowth of our consulting heritage, and we recognize that the 2008 market
meltdown brought to light the need for an added level of scrutiny regarding our platform. To ensure New York
Life Investments is applying the appropriate amount of reasonable care when it comes to providing due
diligence on the funds, we monitor the fund families via various methods, including in-person due-diligence
meetings (both in-house and on-site), teleconferences, and a collection of quarterly updates. We periodically
review fund families’ organizational structure, product strategy, process, personnel, and fees to ensure all funds
on our investment platform remain of high quality. On a quarterly basis, we review each fund and evaluate
(according to our Morningstar-approved set of criteria) to determine if a fund should be added or removed from
our alliance matrix.
401(k) Services
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
We have recently expanded our postretirement product offerings to include an enhanced Rollover IRA option
and a Lifetime Annuity product. We have expanded our participant service-center hours and are implementing
advice by phone through the center. We are also making significant improvements to our participant Website.
Regulatory Action Disclosures
1. Is your company involved in litigation regarding fees, fee disclosures, or revenue sharing? No
Does your company intend to change its policies regarding these issues? No
New York Life has been a leader in providing disclosure to our clients and prospective clients regarding
service-fee revenue that we, along with our affiliates, receive from mutual funds and other plan investment
options. We intend to continue this practice, modifying our disclosures as necessary to satisfy client and
participant needs and emerging regulations.
2. Has the company been investigated or are you being investigated for any issues by any outside
agencies?
We are subject to periodic examination by various regulatory authorities and, as is the case with many other
firms in the industry, have received requests for information from various government authorities and
regulatory bodies from time to time. We have no reason to believe that we or any of our affiliates have been
targeted in connection with these inquiries as the subject of any governmental or regulatory enforcement action.
The Online 401(k)
Call-center service: How well have the centers performed?
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 27 of 41
The Online 401(k), Call-center Service, cont.
Our customer support is primarily Web-based, but not Web-only. In addition to having e-mail support, our
clients can contact us directly by phone and talk to a live person, not a recording. In our 2008 Client Satisfaction
Survey, our clients rated the overall quality of support they receive an 8 out of 10. Approximately 55,000 calls
were made to and from our call center in 2008.
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
The Online 401(k) provides administrative and recordkeeping services, along with educational materials and
access to external financial resources to help keep our clients informed. We remain neutral regarding
investments and the selection of funds, and we do not offer financial advice as a part of our services.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
The Online 401(k) does not provide financial advice to plan sponsors or their employees; however, we work
with a network of more than 300 advisers nationwide who can offer specific investment guidance to clients who
have concerns about the market. The message we have consistently communicated is the importance of a longterm perspective, and we advise against cashing out 401(k) assets as a reactive response to an economic
downturn.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
We have strongly encouraged our plan sponsors to adopt a Qualified Default Investment Alternative (QDIA) for
their plan in order to protect themselves against lawsuits filed by participants regarding their plan performance.
4. How has your company’s 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
We have consistently provided education and guidance for clients and participants with online tools and
calculators, our Online Enrollment Meeting, monthly newsletters, and various investment-education materials to
help keep them informed of the latest news and most-recent market trends.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
We are making more of an effort to ensure that our clients are aware of changing provisions as they relate to
selecting funds for their investment platform. We’ve also included information regarding QDIAs as a protection
against potential lawsuits.
Paychex
Response to 2008 Market Meltdown
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 28 of 41
Paychex, Response to 2008 Market Meltdown, cont.
Paychex offers investment platforms supported by Guided Choice, which acts as a co-fiduciary on the fundselection process of the plans’ investments. These services will assist clients who are concerned about their
fiduciary responsibilities.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
Paychex has multiple trading platforms available to the plan sponsor. Options range from a product where the
funds are selected by a co-fiduciary to a product where it is truly open-architecture and the client can choose
from among 3,500 funds. Regardless of which platform the client is on, only mutual funds with no loads are
available to the client and participants. As a result of our multiple trading platforms, the criteria for which funds
are available to our clients has not materially changed due to the economic meltdown.
Principal Financial Group
401(k) Services
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
•
Principal Retirement Income Edge and Principal Retirement Navigator—A comprehensive program for
advisers to use with clients who are nearing retirement or are already retired. It creates a seamless
experience (products, tools, services, etc.), from accumulation through income management. As part of the
program, Principal Retirement Navigator was rolled out as an online planning tool to provide retirees with
financial planning as they enter retirement, and monitoring and replanning while they are in retirement.
•
Launched the Comprehensive Retirement Program group annuity contract in all market segments for
defined-contribution plans. The contract provides access to additional stable-value options for plan
sponsors and enables increased flexibility and speed-to-market for future enhancements. Also, it better
supports our Total Retirement Suite position in all market segments.
Regulatory Action Disclosures
1. Is your company involved in litigation regarding fees, fee disclosures, or revenue sharing?
Does your company intend to change its policies regarding these issues?
We are regularly involved in litigation, both as a defendant and as a plaintiff, but primarily as a defendant.
Litigation naming us as a defendant ordinarily arises out of our business operations as a provider of assetmanagement and -accumulation products and services, as well as life, health, and disability insurance. Some of
the lawsuits are class actions, or purport to be, and some include claims for punitive damages. In addition,
regulatory bodies (such as state insurance departments, the SEC, the National Association of Securities Dealers,
and the Department of Labor) regularly make inquiries and conduct examinations or investigations concerning
our compliance with, among other things, insurance laws, securities laws, ERISA, and laws governing the
activities of broker dealers. We also receive requests from regulators and other governmental authorities
relating to other industry issues, and may receive additional requests, including subpoenas and interrogatories,
in the future.
2. Has the company been investigated or are you being investigated for any issues by any outside
agencies?
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 29 of 41
Principal Financial Group, Regulatory Action Disclosures, cont.
From time to time, as with any large financial-services company, inquiries and investigations are conducted by
our regulators and other governmental authorities.
3. Has the company been involved or are you involved in any ethical investigations?
From time to time, as with any large financial-services company, inquiries and investigations are conducted by
our regulators and other governmental authorities.
Prudential Retirement
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
Prudential has responded proactively, assuring sponsors and participants about our financial strength and
stability, while also expanding and enhancing education and communication efforts aimed at helping them
understand and navigate today’s tumultuous times. For participants, we have created a “Market Volatility”
outreach campaign that includes Webcasts, seminars, and a new Webpage devoted exclusively to the topic. We
have also developed flyers and letters reminding participants not to panic, to take the long view, and to consider
the downturn as an opportunity to increase contributions, more effectively allocate assets, become betterinformed about financial issues, and take control of their financial future. For plan sponsors, we have moved
toward greater transparency, producing financial documents that provide insight into the operation of our
insurance companies’ General Accounts. We believe this increased disclosure is not only a sound business
practice, but also absolutely essential given the uncertainties of the current economic environment. Finally, it
also means ongoing communication from senior management, whether via letters addressing the issues of
greatest concern, or through Webcasts exploring ways to manage the crisis, succeed in the long term, and ensure
the proper path to a secure retirement.
Regulatory Action Disclosures
1. Is your company involved in litigation regarding fees, fee disclosures, or revenue sharing? Yes
Does your company intend to change its policies regarding these issues? Yes
As a major financial institution, we and our affiliates are subject to litigation in the normal course of our
business, none of which in any manner restricts, limits, or affects our ability to provide services to retirement
plans. In the last five years, there has been no material litigation arising from Prudential Retirement’s definedcontribution business. As a public company, Prudential generally discloses material litigation affecting its
businesses through filings with the SEC. For additional information about these matters, please see Prudential’s
SEC filings at www.investor.prudential.com.
Prudential Retirement’s policy is to inform plan sponsors and participants of the amount of all investmentmanagement and other fees associated with the investment options it makes available, as well as the amount of
any per-participant charges and transaction charges imposed. We believe that our disclosures comply with all
applicable laws and regulations. We are aware of the Department of Labor’s and Congress’s activity on the
subject of fee disclosure. We do not think those activities are inconsistent with our existing policy. To the extent
that modifications to how we implement our policy become necessary because of changes in applicable laws or
regulations, we will make those changes.
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 30 of 41
Prudential Retirement, Regulatory Action Disclosures, cont.
2. Has the company been investigated or are you being investigated for any issues by any outside
agencies? Yes
As a major financial institution, we and our affiliates are subject to governmental and regulatory reviews and
inquiries and other legal proceedings in the normal course of our businesses, which in no manner restrict, limit,
or affect our ability to provide services to retirement plans. In the last five years, there has been no material
litigation arising from Prudential Retirement’s defined-contribution business. As a public company, Prudential
generally discloses material litigation concerning its businesses through filings with the SEC. For additional
information about these matters, we refer you to Prudential Financial’s SEC filings, which can be accessed at
www.investor.prudential.com.
3. Has the company been involved or are you involved in any ethical investigations? Yes
Prudential, being a large financial-services organization, is frequently subject to regulatory examinations by
regulators and governmental authorities. As a public company, Prudential generally discloses material matters
concerning its businesses through filings with the SEC. For additional information about these matters, please
see Prudential Financial’s SEC filings at www.investor.prudential.com.
Putnam Investments
Call-center service: How well have the centers performed?
Putnam has won the coveted Dalbar “Triple Crown” Award for Service Excellence 10 out of the last 12 years,
an accomplishment unparalleled in the mutual-fund industry. We have also won the Dalbar Mutual Fund
Service Award 17 out of the last 18 years. Putnam exceeded industry standards to win the Mutual Fund Service
Award for service to shareholders, the Annuity Service Award for exceptional service to annuity contract
holders, and the Financial Intermediary Service Award for quality service to brokers. Putnam also received top
honors in all three categories of the Financial Intermediary Service Award for excellent postsale and presale
service.
Among those who participated in Boston Research Group’s 2008 poll of 1,586 plan sponsors, Putnam was
ranked among the leaders in service and value. This poll was based on clients that were “highly satisfied” and
Putnam was ranked as follows in participant services:
•
#1 — Education services
•
#1 — Website
•
#1 — Account statement
•
#2 — Automated phone service
•
#4 — Telephone representatives
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
Putnam provides online quarterly Capital Markets Outlook updates to ensure ongoing education opportunities
for our clients. Updates reflect the thinking of Putnam’s senior market strategists, supported by the firm’s staff
of economists and research analysts. As part of our Bear Market Relief Kit, Putnam addressed the effects of the
subprime credit crisis and record energy prices in an effort to help clients take a clear-eyed assessment of their
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 31 of 41
Putnam Investments, Response to 2008 Market Meltdown, cont.
portfolio and long-term financial goals. In addition, our Outlook update provided the following key takeaways:
policymakers are taking appropriate steps to stabilize the global financial sector; the aftermath of the credit
crunch will have a profound impact on money management; and distressed mortgage-backed securities are
poised to become a new asset class.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
In mid-2008, Putnam launched an entire campaign aimed at educating and reassuring participants about their
overall investment strategy, delivered in partnership with their plan’s adviser. Key components of the piece—
which are available in print and online—include “Stay Invested,” “Don’t Miss the Market’s Best Days,”
“Markets Recover from Crisis,” and “Alternating Market Leadership.”
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
While Putnam does not offer legal advice to clients, we provide tools and resources to help them ensure that
procedures are in place to limit their fiduciary liability. Our fiduciary toolkit includes the following
components: Fiduciary Planning Guide, Fiduciary Responsibility Checklist, ERISA Section 404(c) Checklist,
and Investment Policy Statement Checklist and Sample. We believe that education of participants, combined
with a fiduciary process, are among the best ways that sponsors can protect themselves during periods of market
volatility.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
2008 has proven to be a difficult market for all investment managers. In order to deliver continued performance
across all sectors, Putnam has made significant changes, including investing in the business by hiring
experienced portfolio managers from across the industry, hiring a new head of trading, assigning a new head of
research and hiring 16 experienced research analysts, integrating large-cap research and implementing a new
compensation program for analysts, clarifying the equity product line, defining fundamental research as the
cornerstone of Putnam’s equity management, and realigning compensation for portfolio managers in line with
our focus on top-flight performance.
401(k) Services
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
Putnam regularly works to upgrade our participant Website, ibenefitcenter, in order to improve and simplify the
participant experience. We have recently consolidated the exchange and allocation functionality to provide a
simpler way for participants to make investment decisions. We are also offering new Web functionality that
allows participants to access daily statements, capturing financial data for a specified date range. Other
enhancements include online Beneficiary Tracking, withdrawals online, Web redesign, Web authentication
changes, and three- and five-year personalized-rate-of-return on both ibenefitcenter and participant statements.
Regulatory Action Disclosures
1. Is your company involved in litigation regarding fees, fee disclosures, or revenue sharing? Yes
Does your company intend to change its policies regarding these issues? Yes
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 32 of 41
Putnam Investments, Regulatory Action Disclosures, cont.
Given the continual focus on fees and disclosure by clients and shareholders, Putnam is currently involved in
litigation regarding these issues. At this time, Putnam is not aware of any pending litigation regarding revenue
sharing.
2. Has the company been investigated or are you being investigated for any issues by any outside
agencies? Yes
Putnam is not currently the subject of an investigation by any outside agencies. Putnam has received inquiries,
including requests for documents and information, in the course of its business from various state and federal
regulators inquiring about certain of Putnam’s policies and procedures. Each of these matters was handled in the
ordinary course of business.
3. Has the company been involved or are you involved in any ethical investigations? Yes
Similar to a number of investment managers over the past few years, Putnam has been involved in varied
inquires and investigations. However, Putnam is not currently the subject of any ethical investigations by
outside agencies.
Sentinel Financial Group
401(k) Services
4. Is your company owned by, does it own, or is it an affiliate of a company(ies) that advises 401(k)
plans? Yes
If yes, which one?
Sentinel Financial Group includes Sentinel Pension Advisors (a Registered Investment Advisor) as well as
Sentinel Benefits Group, a retirement plan administration, recordkeeping, and consulting firm.
The Standard
Response to 2008 Market Meltdown
4. How has your company’s 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
Like most providers, our general education materials available to both plan sponsors and plan participants have
had a heightened focus on the subjects of defining and managing investment risk, proper asset-allocation
techniques, and fundamental investing principles.
401(k) Services
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
We now offer consolidated recordkeeping and administrative services for both group annuity and trust plans on
one recordkeeping platform (Sungard Omni Plus).
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 33 of 41
SunTrust Bank
Response to 2008 Market Meltdown
4. How has your company’s 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
No changes have been made to education materials. However, our education specialists meet directly with
participants or hold group meetings in which they discuss the importance of a diversified long-term investment
strategy and the ways that this may be achieved.
401(k) Services
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
In 2008, we added targeted Web-messaging capabilities that are used to communicate to specific groups within
the plan population. This capability improves the participant Web experience and raises the participants’
awareness of plan features. In addition, we completed the rollout of first dollar prospectus delivery services.
Transamerica Retirement Services
Response to 2008 Market Meltdown
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
Amid challenging economic times, it is increasingly important for investors to assess their financial situation
and take back control of their retirement-saving strategy. Recognizing this growing need, Transamerica
Retirement Services has launched a program to help retirement-plan participants weather the financial storm,
create a successful investment plan, and regain confidence in their financial future. This new program, named
“the RECOVER Plan by Transamerica,” is designed to help participants understand the causes of the economic
situation, the cycles of the financial markets, and how to evaluate and improve their own prospects for
retirement.
401(k) Services
1. Has your company merged with or acquired another 401(k) provider in the past year? Yes
If yes, which one?
On January 1, 2008, Transamerica Retirement Services, through AUSA Holding Co. (an AEGON company),
acquired Penco Inc. (PENCO). Transamerica and PENCO had maintained a strong business alliance over the
past 14 years as PENCO had provided varying levels of back-office administration services for thousands of
Transamerica retirement-plan customers.
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
We enhanced “Retirement: A Journey Made Simple,” our participant-enrollment workbook; launched online
Web tutorials designed to increase understanding of the administrative tools available to plan sponsors on
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 34 of 41
Transamerica Retirement Services, 401(k) Services, cont.
www.TA-Retirement.com; and introduced enhancements to “Transamerica Partner iSeries,” a Web-based,
virtually paperless, plan administration tool for TPAs. These enhancements enable TPAs to review and approve
loan withdrawals as well as termination, hardship, and in-service distribution functions online.
T. Rowe Price
Call-center service: How well have the centers performed?
The call center continues to achieve high marks in quality and service. This year, participants and sponsors gave
the call center top marks in all of the surveys conducted. Most recently, J.D. Powers recognized T. Rowe Price
as being a Customer Service Champ among such companies as The Ritz-Carlton and Lexus. T. Rowe Price
came in 9th on the list and received accolades for phone-center management, along with Website and walk-in
centers, during the market volatility that was experienced in the fall of 2008.
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
The events that took place during the third quarter of 2008 were unprecedented in the financial-services
industry. The markets are seeing increased turbulence, with the potential for increasing levels of mergers,
acquisitions, government bailouts, and bankruptcies. Our investment professionals continue to position their
portfolios as events unfold and will remain vigilant on behalf of our investors.
Throughout this period, T. Rowe Price will continue to follow its time-tested, risk-aware investment principles
that are designed to create long-term value for our clients and shareholders. Sticking to this approach has
contributed to success for our clients over the past seven decades.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
T. Rowe Price’s primary message to participants has been to stay the course, focus on the long term, and not let
the market drive investment decisions. In doing so, we have offered five things that participants can control
when dealing with market instability:
•
Create an investment strategy based on your time horizon and stick to it.
•
Avoid tapping your retirement account for loans and withdrawals when times are tough.
•
Reduce spending wherever possible.
•
Keep contributing to your retirement plan and your emergency account.
•
Don’t let your emotions get you off track. Remember to keep a long-term perspective and maintain
your investment strategy through all market conditions.
4. How has your company’s 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
We understand that the collapse of substantial and well-known financial firms and the accompanying market
turbulence is unsettling. As we continue to follow these events, we can assure you that T. Rowe Price associates
around the globe remain focused on our disciplined investment and business processes to help us navigate the
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 35 of 41
T. Rowe Price, Response to 2008 Market Meltdown, cont.
current market conditions in a consistent and thoughtful manner. With regard to educational materials intended
to meet the requirements of 404(c), we continue to work closely with our plan-sponsor clients and their counsel
in preparing appropriate education materials and in ensuring that such materials are providing accurate, relevant
information for participants.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
This is an extremely complex situation and our investment professionals are evaluating existing portfolio
holdings and potential investments on a case-by-case basis, and closely monitoring developments in the
financial markets. In short, we are responding to today’s events with our clients’ best interests in mind, much as
we have done in past market disruptions.
Union Bank & Trust
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
Asset allocation and diversification are always important components of a successful portfolio. 2008 was a year
unlike any other, which resulted in nearly all categories of investments experiencing a loss. We continue to
advise participants to have faith in the market and to evaluate their risk tolerance and asset allocation on a
regular basis to ensure that they are in line with their investment objectives.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
During this economic time it is important that all participants review their asset allocations by administering a
risk-tolerance assessment. Once a risk assessment is complete, this allows the participant to determine whether
or not realignment of assets is necessary.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
Union Bank advises all plan sponsors to have an investment policy that is reviewed on a regular basis. Our
investment team will proactively go out to visit with the plan sponsor and its investment committee. During this
process the investment manager will review investment performance and expenses against applicable
benchmarks. The investment manager and plan sponsor will work together to make necessary changes in
accordance with the plan sponsor’s investment policy. We also provide extensive employee education and tools
to help ensure that participants are equipped to make sound investment choices, thus reducing the risk of
potential lawsuits.
4. How has your company’s 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
404(c) education provides vital information that affects both participants and plan sponsors, and Union Bank &
Trust has always considered it a priority. Our ability to be proactive meant it was not necessary to provide new
or additional education. Union Bank does not believe it should take a market crisis to provide the education and
service our clients need.
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 36 of 41
Union Bank & Trust, Response to 2008 Market Meltdown, cont.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
Union Bank & Trust has always been proactive in our investment review process. The Retirement Plan Services
Department has increased the resources dedicated to the analysis of investment options. These resources include
human capital as well as technology and software, and have greatly enhanced the services we provide our
clients.
USI Consulting Group
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
We explain that asset allocation over a diversified menu of investments is intended to help achieve long-term
goals. Over time, market cycles will cause certain asset categories to rise and fall. Investing in a diversified
portfolio and rebalancing over a long-term savings time horizon will help limit risk and provide a better
opportunity to achieve goals.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
Each individual investor has to assess his own savings time horizon and tolerance for risk. If the time horizon is
shorter and the risk tolerance is low, the investor should weight his allocation more heavily toward short-term
cash and fixed-income investments. If he has a longer time horizon and risk tolerance is higher, he should
weight his allocation more heavily toward a diversified equity portfolio.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
We recommend that plan sponsors continue to offer a diversified menu of options, including various diversified
equity, fixed-income, and short-term cash options. A more detailed focus on credit analysis of fixed-income
investments is advised. They should develop and maintain an investment policy statement that charts out
specific criteria for investments to be included in the menu. A regular review is performed to ensure that the
investment options satisfy the criteria set forth in the investment policy statement. Any investments that do not
meet the criteria should be considered for replacement.
4. How has your company’s 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
We had developed and were delivering education modules early in 2008 that discussed the considerations for
investing in a down market. Those same principals hold true even after the meltdown.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
As part of the service, our Investment Advisory team already performs independent, exhaustive due diligence
on the investments we recommend. More recently, we have included a thorough credit analysis of fixed-income
investments. In addition, we have included a review of the various government programs that affect the fixedincome and cash investments.
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 37 of 41
Vanguard
401(k) Services
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
We update our core recordkeeping system at least quarterly to ensure that it complies with all regulatory and
legislative requirements. In addition to these regular upgrades, we frequently update other key systems,
including our participant and plan-sponsor Websites, to refine and expand services.
Recent upgrades include:
•
Greater personalization when participants interact with our secure Retirement Plans Website. Based on
life stage and financial information, they receive relevant, targeted messages that help them follow a
clearer path toward retirement security.
•
Enhanced plan analytics available through our Plan Sponsor Bridge Website, allowing plan sponsors to
benchmark plan statistics for participation, asset allocation, and other measures against Vanguard plansponsor clients in aggregate.
•
Redesigned Institutional Website with a dedicated defined-contributions area that offers research and
recommendations to help plan sponsors address their fiduciary and administrative needs and concerns.
•
Expanded electronic communication with participants, including our award-winning MoneyWhys
participant newsletter delivered monthly by e-mail, and statements and confirmations provided
securely through our participant Website for those who elect the service.
Regulatory Action Disclosures
1. Is your company involved in litigation regarding fees, fee disclosures, or revenue sharing? No
Does your company intend to change its policies regarding these issues? No
As with similar institutions, The Vanguard Group and certain of its affiliates are involved in litigation from time
to time. This includes litigation relating to contractual disputes, provision of investment-related services,
employment disputes, and property liability matters. None of that litigation has been material to the operations
or financial condition of The Vanguard Group or its affiliates.
2. Has the company been investigated or are you being investigated for any issues by any outside
agencies? No
Like other regulated entities, The Vanguard Group and its subsidiary, Vanguard Fiduciary Trust Co. (VFTC), as
providers of various services to retirement-plan clients (including recordkeeping, trustee, and investmentmanagement services), are routinely examined or audited by regulators. From time to time, these entities receive
subpoenas and other requests for information and routine inquiries from civil litigants and regulators, including
the Department of Labor. Neither the DoL nor any other regulator has made adverse findings, initiated
proceedings, or imposed fines or penalties against The Vanguard Group or VFTC related to their administrative,
recordkeeping, or investment services.
3. Has the company been involved or are you involved in any ethical investigations? No
Like other regulated entities, The Vanguard Group and its subsidiary, Vanguard Fiduciary Trust Co. (VFTC), as
providers of various services to retirement plan clients (including recordkeeping, trustee, and investment
management services), are routinely examined or audited by regulators. From time to time, these entities receive
subpoenas and other requests for information and routine inquiries from civil litigants and regulators, including
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 38 of 41
Vanguard, Regulatory Action Disclosures, cont.
the Department of Labor. Neither the DoL nor any other regulator has made adverse findings, initiated
proceedings, or imposed fines or penalties against The Vanguard Group or VFTC related to their administrative,
recordkeeping, or investment services.
Wells Fargo
Call-center service: How well have the centers performed?
We consistently measure participants’ satisfaction with our services by conducting ongoing satisfaction surveys,
and measuring how well our call center interacts with randomly sampled participants and how well we meet
their needs. Survey results continually show participant satisfaction rates in excess of 90%.
Our call-center representatives’ calls are also monitored and evaluated on a number of criteria, ensuring each
participant is assisted in a timely, professional, and satisfactory manner.
In addition to subjective evaluation, our call-center representatives receive daily performance statistics,
including number of calls, average handle time, and time in various call states (hold, talk, break, etc.); weekly
statistics, including adherence and average quality; and month-to-date call statistics.
Response to 2008 Market Meltdown
1. What explanation has your company given for why diversified portfolios did not protect
participants from the 2008 meltdown?
There was no safe haven in the volatile 2008 market, and most plan participants know that. Wells Fargo has
developed a series of educational articles, podcasts, FAQs, and campaigns to help them understand this. Many
plan sponsors are sharing this information with plan participants to educate them regarding what has occurred
and to put these results in their proper perspective. Participants have been encouraged, however, to stay focused
on the big picture, and understand that these short-term fluctuations may create anxiety, but to keep a long-term
strategy in mind before making any hasty decisions based solely on the market’s short-term ups and downs.
In our view, the best portfolio not only provides opportunities for long-term capital gains, but also keeps
participants investing even in weak markets. We try to accomplish these goals by managing downside risk
versus maximizing returns. The glide path of the Wells Fargo Advantage Dow Jones Target Date Funds is thus
more conservative than that of many of its peers, while still providing the opportunity for long-term growth. In
2008, these funds outperformed many in its peer group, and helped minimize the effects of the turbulent market.
2. What recommendations has your company given to participants to help them protect
themselves from the types of losses suffered in 2008?
Participants have been encouraged—via a comprehensive series of articles, commentaries, videos, and
podcasts—to maintain their perspective amid the ups and downs of the market. Key educational themes focused
on the things they can control: their long-term retirement goals, their need to continue or even increase
contribution rates, and their asset allocation and diversification. In addition, information about the protections
and safeguards in place for retirement-plan accounts has also been provided. These communications have been
distributed in a variety of ways, including online, e-mail, mail, and at the worksite.
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 39 of 41
Wells Fargo, Response to 2008 Market Meltdown, cont.
3. What recommendations has your company given to plan sponsors for how to protect themselves
from losses and potential lawsuits over participant losses in 2008?
There has never been a more important time for a plan sponsor to focus on its responsibilities as a fiduciary, and
Wells Fargo has dedicated extensive efforts to helping sponsors understand and manage their fiduciary
responsibilities.
As a service to plan sponsors, we provide investment-strategy consultation and guidance, helping them develop
and adhere to their investment policy statement, and plan for anticipated changes in the regulatory landscape.
We also help sponsors decide if their retirement plan is producing adequate results for their participants by
measuring key indicators: participation, deferral rates, and diversification. And we continually update and
educate plan sponsors on the latest developments and trends in fiduciary issues, by means of Webcasts, enewsletters, white papers, and updates on our plan-sponsor Website.
We encourage plan sponsors to take an active role in providing timely education for their participants, and offer
a variety of educational materials for distribution via multiple channels to help participants understand the
current market conditions and manage through this volatile period.
By addressing fiduciary responsibilities in this proactive manner, Wells Fargo helps plan sponsors not only
prudently govern their retirement plan, but also protect themselves against potential lawsuits that may arise over
participant losses.
4. How has your company’s 404(c) education and material changed in response to the events
underlying the 2008 meltdown?
Wells Fargo increased the emphasis on asset allocation and investing for the long-term in all the meetings we
have held at our clients’ workplaces to educate employees about their retirement plans. Educators have been
addressing the recent market swings, providing historical context, and offering additional time for Q&A as
needed.
As stated before, we realized we needed to encourage plan sponsors to take an active role in providing timely
education for their participants, and offer a variety of educational materials to distribute via multiple channels to
help participants understand the current market conditions and manage through this volatile period. Materials
include: timely articles and market-analyst commentary posted to our Website, interactive Webinars, and a
complete campaign dedicated to helping participants gain awareness and understanding of market downturns.
5. What changes has your company made in its due diligence and/or investment process as a result
of the 2008 meltdown?
We have an extensive, established, and proven process in place for researching appropriate funds for plan
sponsors to consider for their retirement plans, and the market downturn has not changed our process. We go
through a disciplined approach to identifying funds, and while underperformance of a fund may trigger research
or more-intensive monitoring, underperformance alone does not necessarily trigger fund replacement. It is
important that during a down market we maintain a thoughtful and steady approach—keeping our plan sponsors
and participants calm and on track.
401(k) Services
2. Has your company added significant new capabilities that are applicable to 401(k) plans? Yes
If yes, what are they?
We are continually assessing opportunities to enhance the plan-sponsor and plan-participant experience through
new tools, system developments, and online functionality. Our focus has been around the enhancement of our
automatic features, Website, and electronic delivery of communication and educational materials.
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 40 of 41
Wells Fargo, 401(k) Services, cont.
4. Is your company owned by, does it own, or is it an affiliate of a company(ies) that advises 401(k)
plans? Yes
If yes, which one?
BPS&M, a Wells Fargo company, is an employee-benefits consulting firm that provides a full range of services
focusing on the design, implementation, administration, and communication of retirement plans, health and
welfare programs, and nonqualified deferred-compensation plans. BPS&M consults more than 700 clients,
located throughout the United States, with business interests in local, national, and international markets. Its
history and growth are based on providing customized actuarial and consulting services that exceed clients’
expectations.
Wells Fargo’s brokerage business provides advisory, brokerage, asset management, and other financial services
through more than 15,600 full-service financial advisers nationwide and 5,900 licensed financial specialists in
retail bank stores. We help our clients make the most of their existing and potential assets by offering sound
investment guidance and providing a high level of service. Wells Fargo’s brokerage business delivers a full
array of services through multiple channels, providing optimal choice and convenience for clients.
Wells Fargo brokerage includes Wachovia Securities LLC and Wachovia Securities Financial Network LLC;
Members SIPC; and separate, registered broker-dealers and nonbank affiliates of Wells Fargo & Co. and Wells
Fargo Investments LLC (Member SIPC), a non-bank affiliate of Wells Fargo & Co.
Addendum: 2009 CFO 401(k) Buyer’s Guide, A – Z
Page 41 of 41