Claiborne "Chip" Morton

By his own admission, Chip Morton “pounds the table” on the Pension Protection Act (PPA) provisions. “Many participants never should have been given investment discretion” for their accounts, he maintains. Therefore, he tries to get managed accounts, one of the qualified default investment alternatives (QDIAs) under the PPA, in place in all of his 34 client plans (using target-date funds if managed accounts are not available). In fact, he is such a firm believer in these programs that, “if [my clients] don’t do managed accounts on an “opt out” basis by 2010, I don’t want to work with them.” The firm is an affiliate of National Retirement Partners (NRP) but uses Raymond James as its B/D and registered investment adviser (RIA). While Morton acknowledges that Raymond James is a strong B/D, its focus on retail business offers more assistance on participant issues, and NRP gives him the needed services and camaraderie with like-minded people for the plan-level focus. “I get synergies from both and bring them together at my practice,” he notes.

The recent market environment, Morton says, has led to panicking participants and, therefore, a larger opt-out of participants from the QDIA managed accounts than he anticipated. However, he told participants that the goal of the managed accounts was to limit volatility and not be down as much as the general market.

“I don’t want to get my business to where I’m not where the rubber meets the road,” Morton comments. He says he does well with “labor groups,” and many of his clients (his average client plan has $40 million to $50 million in plan assets) are manufacturing firms. Morton enjoys working with participant pools where he thinks he can make an impact—and those are the groups for which the automatic provisions make the most sense. He believes that plan sponsors who try to embrace 404(c) are providing a good investment platform, but are putting the onus on participants who are not equipped to use it. “The PPA confirms what all of us realize: No matter how good the platform, most people cannot make the most of it,” he comments. He does no personal work outside the plan (he outsources rollovers to another company), but does spend years working to build up trust with the employees at client firms to help them make the right decisions.

Morton has turned his attention to helping bring that front-line experience to Washington, having recently been invited to testify on the subject of advice at the Department of Labor. “I think they need to hear from the people who actually do the work,” Morton explains. He says he has told the Department of Labor that it should come up with a minimum qualification for advisers who want to work with retirement plans. For example, the PPA fiduciary adviser regulation does not include adviser qualifications, which should be there in Morton’s opinion.

Photo by Rick Schamberger