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“HALF LOADED”. Team Members Derek BrzezinskiKeri Etheredge Angie MurrayAndrew Walther. AGENDA. Team Introductions Problem Statement Research Methodology Results Conclusions and Recommendations Limitations Questions and Answers. PROBLEM STATEMENT. “Half Loaded”

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“HALF LOADED”

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Half loaded

“HALF LOADED”

Team Members

Derek BrzezinskiKeri Etheredge

Angie MurrayAndrew Walther


Agenda

AGENDA

  • Team Introductions

  • Problem Statement

  • Research Methodology

  • Results

  • Conclusions and Recommendations

  • Limitations

  • Questions and Answers


Problem statement

PROBLEM STATEMENT

  • “Half Loaded”

    • An evaluation of the UH O.R.P. providers

  • Current Status

    • 15 O.R.P.s with contact name and phone number listed

    • 90 days to enroll or permanently forfeit option to participate

    • No easy way to compare service offerings of various O.R.P.s


Problem statement1

PROBLEM STATEMENT

  • Current Status (cont.)


Research methodology

RESEARCH METHODOLOGY

  • Contacted each O.R.P. to obtain key information about service offering

  • Each team member used same pre-selected set of questions

  • Data was compiled in database to compare providers


Research methodology1

Data Collected

Services provided

Mutual fund families offered

Percent of eligible faculty that use provider

Avg. Morningstar rating

Avg. expense ratio

Loads/Fees/Commissions

Sales contests/Prizes

Advisor service/Fees

Advisor compensation

Advisor investment practices

Contact Experience

RESEARCH METHODOLOGY


Results

RESULTS

  • 1647 Faculty and Staff Eligible for O.R.P.s 1400 are Enrolled in Program (85%)

  • Most Providers Offer Mutual Funds that are Rated by Morningstar

  • Some Providers Offer Fixed and Variable Sub-annuities that are Not Ratable through Morningstar


Results1

RESULTS

  • Ranges of Results


Results2

Morningstar rating >3.3  <3.0 

Exp Ratio < 1.0  >1.35 

Loads/Fees None  > 4.0 

Mand Adv Fee No  Yes 

RESULTS


Results3

RESULTS

  • UH Employees Top 4 Selected O.R.P.s


Results4

RESULTS

  • Surprising Results

    • The Pioneer Group admitted offering sales prizes

    • Chase and Lincoln National Life Charge Surrender/Withdrawal Fees Beginning at 6% and Declining Over Time

    • ING/Aetna sent our questions to their legal group and never responded

    • 50% of Providers have Less Than 2% Participation

    • 20% of Providers have 65% Participation


Conclusions recommendations

CONCLUSIONS & RECOMMENDATIONS

  • O.R.P. Contact List Out of Date

    • Two providers on list no longer offer service

    • One provider changed company names

    • No web sites or email addresses provided

    • Many incorrect phone numbers

  • Based on Current Information Available, Employees are Likely to Decide Fate of Retirement Account Based on Proximity and Advisor Personalities

  • Properly Evaluating Each Provider With Available Information Would Take Significant Time and Effort


Conclusions recommendations1

CONCLUSIONS & RECOMMENDATIONS

  • No Correlation Exists Between Providers with High % of Clientele and High Expense Ratios or Fees

  • Fidelity Investments, T. Rowe Price and TIAA-CREF are the recommended providers

  • The Pioneer Group, Merrill Lynch and American Express are not recommended due to high fees and low ratings


Conclusions recommendations2

CONCLUSIONS & RECOMMENDATIONS

  • Provide Information on UH Web Site

    • Current Contact List for Each O.R.P. with Web Site and Email Address

    • Simple Glossary of Key Terms

    • List of Generic Questions and Employee Could Use to Shop for an O.R.P.

    • Simple Table Comparing Each O.R.P.

      • Services Provided

      • Avg Morning Star Rating

      • Avg Expense Ratios

      • Avg Loads/Fees/Commissions

    • Link to List of All Fund Provided with Key Data For Each Fund (Morningstar Rating, Expense Ratio, Loads)


Limitations

LIMITATIONS

  • Short time frame limited ability to contact all O.R.P.s and to verify all data

  • O.R.P.s that Offered Annuity Funds Were Difficult to Rate and Compare

  • Data presented may change and may not be valid in the future


Questions and answers

QUESTIONS AND ANSWERS

Questions and Answers


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