Washington Wealth Management (WWM) operates as an
independent, hybrid registered investment adviser (RIA) that strives to enable
financial advisers to achieve independence and build equity in their own businesses.
NFP says the transaction better positions WWM and NFP Advisor Services Group to
jointly provide the tools and resources needed by advisers to smoothly
transition to, and successfully operate in, the independent adviser space.
WWM currently supports 10 fee-based and hybrid independent financial
adviser teams across the nation, representing nearly $800 million in client
assets.
Commenting on the acquisition, James L. Poer, president of
NFP Advisor Services Group, says his firm hopes to work closely with WWM to
provide support to advisers who would like to transition to the independent
model. The firms will also work collaboratively to provide advisory platforms
and solutions to independent adviser clients.
Robert Bartenstein, CEO of WWM, says he expects the expanded
relationship with NFP to improve execution of its full-service transition model
for advisers who determine independence is a better arena in which to do
business on behalf of their clients.
“The combined solution is a true integrated approach,
from back office support to adviser-facing technology, all within a welcoming
environment filled with people who are committed to empowering advisers,”
Bartenstein says. “This alignment is going to wake some people up to what’s
possible in this space.”
The St. Louis-based law firm of Schlichter, Bogard
& Denton filed a class action on behalf of participants in the retirement
plans of Novant Health Inc., seeking the repayment of millions in fees and
losses.
The suit names Novant’s administrative and retirement plan
committees as defendants, and also implicates Great-West Life & Annuity
Insurance Company, D.L. Davis & Company and MassMutual as collecting
excessive compensation for services provided to Novant’s two defined
contribution retirement plans. The case, Karolyn Kruger, M.D. et al.,
v. Novant Health Inc., et al., (case no. 14-208), was filed in the
U.S. District Court for the Middle District of North Carolina.
The complaint alleges that Novant, which is a hospital and
physician office system based in Winston-Salem, North Carolina, breached its
fiduciary duties by causing plan participants to pay millions of dollars in
excessive recordkeeping and administrative fees to third-party service
providers. In addition, the complaint alleges breaches of fiduciary duties
resulting from Novant’s decision to offer imprudent investment options. These
breaches resulted in a substantial reduction in the retirement assets of many
plan participants, according to the compliant.
The complaint also alleges that the Novant defendants
consistently and fraudulently concealed their breaches, and the breaches of
others by, in part, informing plan participants that they were not paying
certain fees for the plan, but that Novant paid.
Jerry Schlichter, the lead attorney for the Novant
plaintiffs, said in a statement announcing the suit that the hospital system
has a duty to ensure that fees charged to its employees for retirement-related
services are reasonable, that prudence is used in selecting and monitoring
investment options, and that conflicts of interest and self-dealing are systematically
avoided.
“It
has failed in that duty,” Schlichter said.
The six plaintiffs listed by name in the suit are all
residents of North Carolina and current or former employees of Novant.
Regarding the providers mentioned in the suit, the complaint alleges that
Great-West Life & Annuity Insurance Company, an administrative and
recordkeeping service provider for the plans, received excessive compensation
of approximately $8.6 million between 2009 and 2012. Additional payments
received by Great-West from the investment companies providing the plan’s
investment options constituted excessive amounts of revenue sharing, the
compliant states, which amounted to “kick-backs.”
The complaint also alleges wrongdoing by D.L. Davis &
Company, which is based in Winston-Salem and is a brokerage company that
provides the Novant plans with limited marketing and enrollment services. The
complaint states that D.L. Davis, under CEO and president Derrick L. Davis, was
paid excessive fees up to $9.6 million between 2009 and 2012 in the form of
“commissions.” The complaint states that D.L. Davis also received a second
source of revenue in the form of “kick-backs” from the managers of the plan
investment options. D.L. Davis is a registered broker of MML Investors
Services, a subsidiary of the Massachusetts Mutual Life Insurance Co.
According
to the compliant, Derrick Davis has had a long-term, ongoing relationship with
Novant, starting in 1996. The complaint details that Davis, through other
corporate entities he owns or controls, has entered into a variety of land
development projects and office building leasing arrangements in the
greater-Winston-Salem area with Novant, raising the possibility of conflicts of
interest.
The complaint also highlights that early in Davis’ business
relationship with Novant, he made a charitable gift to Novant in excess of $5
million. In addition, at nearly the same time that Davis reportedly gave Novant
the $5 million, a Davis-owned development company in which he is an officer,
manager and/or owner, East Coast Capital, announced plans to develop the
Southeast Gateway project. The project included Novant Health as occupying
40,000 square feet of this office development for a call center.
The complaint points out that retirement plan fiduciaries
are required to avoid self-dealing under the Employee Retirement Income Security
Act (ERISA).
Novant’s retirement program consists of approximately 25,000
participants with total assets around $1.2 billion. Novant offers its employees
and retirees an ERISA-ruled retirement program known as the Retirement Plus
Plan. The program includes two plans, the Tax Deferred Savings Plan of Novant
Health Inc., and the Savings Supplement Retirement Plan of Novant Health Inc.
Novant provided the following statement to PLANADVISER:
“We have not been officially served with the lawsuit and cannot comment on active litigation, but overall Novant Health has a Retirement Plan Committee, which is appointed by Novant Health’s board of trustees, which carefully oversees the selection of the retirement plans’ investment options and all associated fees.
“The committee receives professional advice from independent legal counsel and retirement plan experts and is deeply committed to selecting and administering the investment options under the plans in the best interest of participants, all in accordance with all applicable laws and regulations. Our retirement plan participants also receive detailed explanations of their investment options and plan fees on an annual basis.”