Products July 6, 2016

National Planning Bolsters Adviser Tech Support

The independent broker/dealer network is making a team of technology experts available to help advisers utilize new client service and practice management technology platforms.
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National Planning Holdings Inc. (NPH) announced the launch of its new Technology Solutions Team, a group of dedicated experts who will support financial advisers with NPH affiliated firms in implementing and optimizing client service and practice management technology platforms.

The Technology Solutions Team will “assist advisers in leveraging both NPH’s proprietary and third-party technology offerings to service existing clients more effectively, drive greater operating efficiency, and identify and pursue new client opportunities, among other goals.”

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The team is comprised of 13 consultants, with specialists allocated to each of NPH’s seven regions nationwide and reporting to a national team leader. “Specialists will provide both personal, in-office training and assistance in addition to telephone-based support,” the firm explains.

NPH has made access to this team available across its entire network of broker/dealers in order to help all of its advisers utilize existing technology solutions more effectively to grow their businesses and serve clients, says Kirsten Bosch, vice president, NPH Advisor Experience Team.

“As many leading technology companies have shown, the best results from technology investments come from not only providing innovative solutions and platforms, but from backing up those solutions with ongoing, end-to-end education and support,” she adds. “National Planning Holdings is putting technology industry best practices to work for our advisers and investing in tools to help them maximize their efficiency, grow their businesses and further elevate the experience they provide to clients.”

Key focus areas for the Technology Solutions Team will be helping NPH broker/dealers and advisers more effectively implement and utilize NPH’s Advisor Dashboard, develop more effective workflows and train new advisers and staff members. The team will also provide ongoing support for “a wide array of technology issues on an as-needed basis.”

Additional information about the program is available here.

Compliance July 5, 2016

Lawsuit Accuses American Century of Self-Dealing in 401(k)

The complaint says the retention of American Century's proprietary mutual funds in its own 401(k) has cost plan participants millions of dollars in excess fees.
Reported by

American Century Services and other fiduciaries to its 401(k) plan have been accused of using the plan as an opportunity to promote American Century’s mutual fund business and maximize profits at the expense of the plan and its participants.

In a statement to PLANADVISER, American Century said, “The suit is without merit, and we intend to mount a vigorous defense.”

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The complaint says American Century loaded the plan exclusively with its own investment offerings, which were managed by American Century Investment Management (ACIM), an affiliate of American Century Services, without investigating whether participants would be better served by investments managed by unaffiliated companies.

According to the complaint, the retention of these proprietary mutual funds has cost plan participants millions of dollars in excess fees. As an example, it says, in 2013, the plan’s total expenses were 48% higher than the average retirement plan with between $500 million and $1 billion in assets. The plan had $577 million in assets as of the end of 2013.

The plaintiffs, former employees of American Century, attribute the plan’s high costs almost entirely to American Century’s selection and retention of high-cost proprietary mutual funds as investment options within the plan; their failure to select the least expensive share class available for the plan’s designated investment alternatives, and their failure to monitor and control recordkeeping expenses. Plaintiffs also accuse the company of failing to timely remove certain funds after it became clear they were imprudent because doing so would cause the firm to lose millions of dollars in investment management fees it received by retaining them.

The complaint also notes that in July 2013, American Century began offering R6 shares for 22 of the funds offered by the plan. Although these R6 shares were 5 to 15 basis points less expensive than the Institutional shares held by the plan, American Century failed to move the plan’s investments to this new share class until sometime in 2014. “The Plan’s failure to timely switch to R6 shares was particularly beneficial to ACIM, which collects higher fees from Institutional shares than R6 shares. For example, ACIM receives an annual fee of 80 basis points for performing investment advisory and management services for the American Century Heritage Fund. ACIM performs the exact same functions for holders of R6 shares, but receives an annual fee of only 65 basis points,” the lawsuit states.

Regarding recordkeeping fees, the complaint notes that in 2011, the plan had 2,253 participants. Plaintiffs contend a similarly sized plan would have been able to obtain “excellent recordkeeping services for between $50 and $60 per participant, or between approximately $112,700 and $135,000.” But, based on information in the plan’s 2011 Form 5500s, the plaintiffs estimate the plan’s recordkeeper at the time received approximately $800,000 in revenue sharing dollars. “This is a grossly excessive amount—approximately six to seven times what a prudent fiduciary would have paid,” the lawsuit contends.

The complaint in Wildman v. American Century Services LLC is here.

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