Deals & People January 21, 2022

Retirement Industry People Moves

NFP realigns its Northeast region leadership; SageView announces $900 million acquisition; MSCI announces senior leadership changes; and more.

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Art by Subin Yang

Art by Subin Yang

NFP Realigns Its Northeast Region Leadership

NFP, an insurance broker and consultant that provides property and casualty (P&C), corporate benefits, retirement and individual solutions, has announced that Kate Henry and Mike Walsh have become co-presidents of its Northeast region. As part of this leadership realignment, Henry and Walsh succeed Bill Austin, who is transitioning to a managing director role focused on scaling NFP’s business in South Florida.

The firm says Henry and Walsh are accomplished leaders who will continue the strong momentum in the region, drive growth and deliver value to clients. They will also remain active in NFP’s mergers and acquisitions (M&A) and recruiting activities, using their expertise and relationships to help NFP attract new firms and integrate them into the region.

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Henry joined NFP in 2012 as the corporate benefits sales leader in the Northeast, leading benefits, retirement and human resource (HR) consulting practices before becoming the regional managing director for benefits in 2017. Walsh joined in 2015 and has served as managing director for P&C in New England and managing director of sales in the Northeast before becoming regional managing director for P&C in the Northeast at the start of 2020.

SageView Announces $900 Million Acquisition

In December, SageView Advisory Group executed definitive agreements with Capital One Investing to acquire investing client portfolios representing $900 million in assets under management (AUM).

Capital One Investing, a direct subsidiary of Capital One Financial Corp., is a Securities and Exchange Commission (SEC)-registered investment adviser (RIA) that offers portfolio management and financial planning services to clients. SageView will also welcome the wealth management team supporting these clients as part of the transaction, bringing on professionals located across the country, including in Maryland, New York, Oklahoma, Tennessee, Texas and Virginia.

“This acquisition directly aligns with our strategic vision to expand the wealth management division at SageView and brings a talented group of financial advisers to the team while expanding our presence nationally,” says Randy Long, SageView founder and managing principal.

The acquisition of Capital One Investing’s client portfolios is in line with SageView’s growth strategy to continue expanding its wealth management arm through recruiting and acquisitions. This is the fourth acquisition that SageView has announced since July 2021 and follows closely on the heels of the recently closed acquisition of Channel Financial in Minnesota, announced January 6.

The transaction is expected to close in the second quarter of 2022, subject to customary closing conditions.

Bryan Cave Leighton Paisner LLP served as legal adviser to SageView on the transaction. Centerview Partners served as financial adviser to Capital One and Wachtell, Lipton, Rosen & Katz served as legal adviser to Capital One on the transaction.

CalPERS Board Elects New Leaders

The California Public Employees’ Retirement System (CalPERS) board of administration has elected Theresa Taylor as board president and Rob Feckner as vice president.

Taylor is serving her second term on the board. She was first elected by state employee members in 2015. She currently serves as the chair of the pension fund’s investment committee and vice chair of the finance and administration committee. Additionally, Taylor serves on the pension and health benefits and the performance, compensation and talent management committees.

Taylor is a principal compliance representative at the California Franchise Tax Board and has worked for the state for more than 25 years. She has also served as vice president/secretary-treasurer for the Service Employees International Union (SEIU) Local 1000 and on the executive boards of SEIU Local 1000 and SEIU State Council.

The president oversees the board’s business and sets meeting schedules and agendas with input from other board members and the CalPERS executive team. The president also makes appointments to board committees.

Feckner has represented school members on the board since his election in 1999. He currently serves as chair of the pension and health benefits and the performance, compensation and talent management committees. He is also on the board governance and investment committees.

Feckner was president of the board for 13 years and is a past president and life member of the California School Employees Association and past executive vice president of the California Labor Federation.

He has worked for the Napa Valley Unified School District for more than 40 years. He is currently a glazing specialist and previously worked as a school bus driver and instructional assistant for special needs students.

The election follows the resignation of Henry Jones, who announced he will be leaving the board effective January 21.

LeafHouse Financial Announces New Transitions

LeafHouse Financial, a technology firm that specializes in investment solutions for the retirement plan space, has announced that co-founder Todd Kading will serve as the new chief executive officer effective January 20. Co-founder Neal Weaver will assume the role of president. Dallas Villarreal is named the new chief compliance officer (CCO).

In the CEO role, Kading will lead the development and execution of long-term strategies, including driving distribution initiatives to revitalize the retirement space.

As president, Weaver will concentrate on the firm’s sales organization to deliver suitable investment solutions for employers and employees

As the new CCO and senior operations manager, Villarreal will manage compliance programs and lead operational and onboarding processes to serve clients and external partners engaging LeafHouse for investment fiduciary services. Villarreal reports to the firm’s chief operating officer, Chad Brown.

FSI Names 2022 Board of Directors and Executive Committee Members 

The Financial Services Institute (FSI) has named four new directors to its board and its 2022 executive committee.

The four new members of the FSI board of directors are as follows:

  • Von D. Cook II, partner, Client Centric Advisors; OSJ branch manager, Cambridge Investment Research;
  • Alex David, president and CEO, Stifel Independent Advisors;
  • Emily Schlosser, chief operating officer (COO), BNY Mellon | Pershing; and
  • Amy Webber, president and CEO, Cambridge Investment Research Inc.

The board also elected five of its directors to leadership positions. 

The directors elected to the 2021 executive committee are as follows:

  • Chair of the board – Ed Forst, president and CEO, Lincoln Investment;
  • Vice chair (chair in 2023) – J. Scott Spiker, executive chairman, First Command Financial Planning Inc.;
  • Immediate past chair – James Poer, CEO, Kestra Holdings;
  • Finance chair – Denise Barrows, financial adviser, Barrows Trostle Advisors LLC; and
  • FSI PAC chair – Steve Horn, president, Prosperity Financial Group.

“Having a strong, visionary board is crucial during this time of continuous change, and we are grateful to have that in our board of directors,” says FSI president and CEO Dale Brown. “Each member of the board, including our four newest directors, brings a diverse and unique perspective along with a wealth of experience in the independent financial services industry. Their leadership will guide our continued momentum in advocating for our members and the clients they serve.”

Creative Planning Acquires Reilly Financial Advisors

The registered investment adviser (RIA) firm Creative Planning Inc. has announced the acquisition of Reilly Financial Advisors, which has more than $2 billion in assets under management (AUM).

Wealth management is at the center of Reilly Financial Advisors’ many offerings. In addition to offering comprehensive financial planning, Reilly also specializes in corporate retirement plans and working with international clientele.

“I could not have asked for a better business partner than Creative Planning for a few key reasons, including their similar business practices and culture, their enhanced—and extremely robust—client service offerings, and their greatly expanded opportunity for employee growth,” says Frank Reilly, Reilly Financial Advisors president.

Republic Capital Group acted as the exclusive investment banking adviser to Reilly Financial Advisors on the transaction. With its latest acquisition, Creative Planning now manages over $100 billion in assets across all 50 states and 65 countries with continued plans for growth throughout 2022.

MSCI Announces Senior Leadership Changes

MSCI Inc., a provider of decision-support tools and services for the global investment community, has announced various senior leadership changes, effective immediately.

Remy Briand, MSCI’s current head of environmental, social and governance (ESG) and climate, has been appointed chief product officer. In this newly created role, Briand will be responsible for leading and driving MSCI’s integrated product suite to meet the needs of clients looking for holistic solutions to tackle investment challenges, capitalize on opportunities and navigate industry changes. He will continue to report to Baer Pettit, president and chief operating officer (COO) at MSCI.

In addition to chief product officer, Briand will also become head of index as Diana Tidd, current head of index and chief responsibility officer, becomes fully dedicated to the role of chief responsibility officer. As head of index, Briand will be responsible for leading the vision and business strategy for MSCI’s Index product line.

Tidd was appointed as the firm’s first chief responsibility officer in 2018. In this now fully dedicated role, Tidd will continue to guide ESG policies for the firm and focus on the comprehensive integration of ESG practices across MSCI’s strategy process, governance structure and business operations. 

With Briand’s appointment, Eric Moen will assume the role of head of ESG and climate. Moen has been with MSCI for over two decades. Over the past 10 years, he has focused on leading the expansion of client solutions across MSCI’s ESG business, working closely with Briand. In this role, Moen will oversee the day-to-day operations of the ESG and climate team and drive collaboration and innovation across MSCI’s product lines. 

On the client service side, Alvise Munari, MSCI’s global head of client coverage, will be named chief client officer and will continue to report to Pettit. 

Jeremy Baskin, head of client coverage, Americas, will take on the new global role of head of buy side client segments, including asset managers, asset owners, hedge funds and wealth. In this role, Baskin will help deepen and increase MSCI’s focus on these client segments to better serve its clients. 

Christine Berg, head of Americas index client coverage, will assume the role of head of client coverage, Americas, and will oversee MSCI’s sales, consulting and client service teams in the region. Before her current position, Berg led the exchange-traded products client coverage team. 

Michelle Shanley, head of strategic account management, Americas, will take on the global role of head of strategic and key accounts. In this role, Shanley will focus on program expansion, C-suite engagement and governance. 

The Wagner Law Group Appoints Chief Legal Officer

The Wagner Law Group has announced that partner Stephen P. Wilkes, has been designated as the firm’s chief legal officer. 

Wilkes is widely known for his practice in the Employee Retirement Income Security Act (ERISA) fiduciary area, as well as related investment management law and securities law matters. In his role as the firm’s chief legal officer, he will work closely with Marcia Wagner as a senior leader of the firm and will be responsible for the firm’s strategic growth process via targeted hiring or practice group acquisition, as well as coordinating the strategic efforts of the firm’s existing practice groups. 

Wilkes will continue in his role as the practice area leader for the firm’s ERISA fiduciary compliance, independent fiduciary and investment management law practices.

Compliance January 21, 2022

Court Compels Arbitration in ERISA Case

The plaintiff in a 403(b) ERISA excessive fee lawsuit filed against Baptist Health South Florida has been ordered by a district court to enter an arbitration process.

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The U.S. District Court for the Southern District of Florida has issued an order in an Employee Retirement Income Security Act (ERISA) lawsuit filed against Baptist Health South Florida on behalf of participants in the hospital system’s 403(b) defined contribution (DC) retirement plan.

The ruling comes in response to the defense’s filing of three motions, including a motion to compel arbitration, a motion to stay and a motion to dismiss under the Federal Rule of Civil Procedure 12(b)(6). In its ruling, the court addresses only the defendants’ motion to compel arbitration, to which the plaintiffs filed a response in opposition and the defendants filed a reply in support. After careful review of the briefing and the relevant legal authorities, the District Court grants the arbitration motion.

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The claims in the underlying lawsuit are typical of excessive fee suits, including that plan fiduciaries failed to objectively and adequately review the plan’s investment portfolio with due care to ensure that each investment option was prudent, in terms of cost; that they maintained certain funds in the plan despite the availability of identical or similar investment options with lower costs and/or better performance histories; and that they failed to control the plan’s recordkeeping costs. However, unlike some recently filed complaints, the suit also cites language from the plan’s investment policy statement (IPS) and argues that the committee fell short in carrying out its responsibilities.

In arguing that the arbitration agreement is not enforceable, the plaintiffs raised two challenges. First, they argued that the arbitration agreement and its waiver of certain plan-wide remedies violates the “effective vindication” doctrine. Second, the plaintiffs argued that the arbitration agreement is not binding, as the agreement was added to the plan by unilateral amendment in 2020. The ruling considers each argument in turn.

As the ruling spells out, the “effective vindication” doctrine is a judge-made exception to the Federal Arbitration Act (FAA) that seeks to balance the competing federal policies in enforcing arbitration agreements and in vindicating plaintiffs’ rights to pursue statutory remedies. Though rarely applied, the doctrine holds that courts may invalidate arbitration agreements that “operate as a prospective waiver of a party’s right to pursue statutory remedies.” Here, the plaintiffs argued that the plan’s arbitration agreement prevents the effective vindication of rights guaranteed in 29 United States Code Section 1109(a).

In particular, the plaintiffs argued that they seek plan-wide relief—such as removal of the plan’s fiduciaries and appointment of new fiduciaries, which is authorized under Section 1109(a)—but that the waiver provision of the arbitration agreement forbids such plan-wide relief. For their part, the defendants argued that such plan-wide relief is only available to those who bring a class action on behalf of the plan. And, the defendants argued, as courts have held that class-action arbitration waivers are permissible, any waiver of a remedy unique to representative or class actions is also permissible.

“Given the FAA’s pro-arbitration policy, as well as the rarity with which courts apply the effective vindication doctrine, the court declines to follow the [plaintiffs’] rationale and holds that the arbitration agreement at issue is valid and enforceable,” the ruling states. “While the arbitration agreement prohibits the recovery of some plan-wide monetary relief, such relief is only available to those who bring a representative or class action. … While the arbitration clause in [the cited precedent case] completely denied some types of statute-authorized relief to the plan, the clause here does not, as individual claimants can each recover the harm to their defined contribution accounts, and they can recover plan-wide relief that does not provide additional benefits or monetary relief to others. For this reason, the arbitration agreement here is valid and enforceable.”

The second issue is also weighed in favor of the defendants.

“Despite the unseemly nature of requiring plan-participant plaintiffs to arbitrate a claim that they never personally agreed to arbitrate, the plan agreed to arbitrate,” the ruling states. “Section 1109(a) claims belong to the plan. Therefore, the relevant inquiry is not whether individual participants agreed to the arbitration agreement but whether the plan agreed to arbitrate. Here, the plan consented to the 2020 amendment, which added the arbitration clause, as the plan expressly provided for unilateral amendment by the plan sponsor. As the plan consented to the arbitration agreement, the plan, and those that bring claims on its benefit, must arbitrate.”

The full text of the ruling is available here.

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