PITTSBURGH - Mellon Bank Corp. has added new investment management capabilities and set up a cutting-edge record keeping and administrative system for a major new bundled defined contribution plan service program, said Tim Keaney, senior vice president of the newly formed Mellon Trust Co. and director of retirement services.
"There was a perception out there that while Mellon certainly had defined contribution plan clients, often as a result of relationships we had with these clients on the defined benefit side, there wasn't a clear sense that Mellon had an easily identifiable product for defined contribution clients.
"Our mutual funds, the Laurel Funds, were also not readily recognized by plan participants.
"We began to build a 401(k) plan program by filling in the coverage gaps. Our acquisition of Dreyfus adds name-brand mutual funds plan participants will recognize," said Mr. Keaney.
The latest building block is an alliance it has formed with Certus Financial Corp., San Francisco, to provide stable value and guaranteed investment contract products, investment vehicles Mellon had lacked.
Robert A. McCormish, senior vice president at Certus, said Mellon and Certus developed direct links into each other's accounting systems through their work for several joint clients in the past. The new alliance, however, will set up a series of standardized products, including pooled collective investment trusts of GICs and other stable value portfolios.
Larger clients also be able to set up separate account stable value asset management.
Mr. Keaney said the agreement with Certus is "one more brick in the fully bundled, 401(k) plan service we are building and will debut once the deal we have struck with Dreyfus is complete."
Mellon's new record keeping and administrative system will go live next month, a culmination of a significant investment in hardware and software over the past two years to build a state-of-the-art client service unit.
Imaging technology will be used to vertically integrate all functions in the record keeping system, said Mr. Keaney.
NEW YORK - Metropolitan Life Insurance Co. will introduce later this summer new asset allocation software to help 401(k) plan participants maximize their investment choices.
The program will model income replacement requirements and suggest asset allocations to help participants meet saving goals.
Gary Lineberry, vice president, said the software will be available on diskettes to sponsors. Met Life also will perform the computer analysis and send the report to participants from worksheets completed by employees.
The software will incorporate Met Life's latest mutual fund offerings, a series of three strategic asset allocation funds, just approved by the Securities and Exchange Commission.
The funds will meet conservative, moderate and aggressive risk parameters for 401(k) plan participants and will be managed by Met Life subsidiary State Street Research & Management, Boston.
Michael Yogg will manage all three funds.
MetLife is offering a new client "guarantee" for the communications and educational programs it provides, said Joe Madden, a company spokesman. MetLife and the client will negotiate the participation rate the client expects to achieve using Met's educational program. If the rate is not achieved, he said MetLife will devote additional resources, including individual consultations and employee focus groups, to the enrollment and communications process until participation reaches the negotiated level.
MetLife has also just announced the introduction of a self-directed brokerage option for plan participants, which will be available later this summer.
ST. LOUIS - General American Life Insurance Co. introduced a stable value asset program as an alternative to guaranteed investment contracts for defined contribution plans.
The stable value program gives smaller plans access to active fixed-income management, with daily valuation, using two pooled investment options.
The new investment vehicle will use as its benchmark the Merrill Lynch 1- to 3-Year Treasury Index.
Payden & Rygel, Los Angeles, will manage one subaccount, investing in AAA rated bonds. BEA Associates, New York, will manage the other subaccount with a minimum average A+ quality rating, as determined by Moody's Investors Service and/or Standard & Poor's Corp.
Bridgemark Capital Group Ltd., Minneapolis, assisted in product design and will market the new stable value program in a joint venture with General American.
A new private label participant education system has been developed by FundQuest Inc., Boston, for use by defined contribution plan service providers, including mutual fund managers, banks, insurers and consultants.
The system includes a personal retirement analysis questionnaire to collect data on a participant. Each participant's risk tolerance is determined, and a series of personalized reports helps establish saving goals, assess retirement income gaps and use plan features to meet objectives.
FundQuest's asset allocation model can be used to offer advice on specific fund choices or to suggest several asset allocation mixes, depending on the vendor and its client.
The turnkey package can be customized to reflect both the vendor's and the sponsor's plan features and investment options and can be delivered according to plan sponsor needs, usually in the annual benefits statement, but also as a separate mailing, at enrollment meetings, or as part of campaigns to increase deferral rates, said Ray Hoffer, FundQuest's vice president of new business development.
FundQuest has provided a similar service offering savings analysis and modeling services for retail investors at the Bank of Boston. The new 401(k) plan educational system is the company's first foray into institutional investment products.
Callan Associates Inc., San Francisco, is developing a service that groups mutual fund managers in the Lipper universe of 4,800 funds by investment style.
The groups - which so far include 10 stock categories from aggressive growth equity to small-cap value - provide benchmarks for defined contribution plan sponsors and participants to evaluate the ongoing performance of investment managers relative to their style peers.
Callan expects to add domestic fixed-income and international fund style groups by the end of the third quarter,
Style group performance information will be delivered primarily through reports designed for use by plan sponsors to aid in selection of fund managers for defined contribution plans. Callan eventually expects to produce reports for plan participants to help asset allocation decisions.
STAMFORD, Conn. - GE Investment Retirement Services Inc., Stamford, expanded its defined contribution plan marketing and sales support with a significant infusion of new blood.
The new marketing team will promote GE's own family of mutual funds to defined contribution plans, as well promote the mutual funds of Kemper Life Insurance, Long Grove, Ill., if GE's bid to buy the company is successful.
Peter Hebert was hired as a regional sales manager and Elizabeth Anne Catalino as program manager of 401(k) services. Mr. Hebert previously was a vice president of plan consulting and marketing at State Street Bank & Trust Co., Boston. Ms. Catalino moved from the client relations department of GE Capital.
Earlier this year, GE hired two other regional sales managers. They are Steven Beringer, formerly a regional vice president, asset management and pension services at Traveler's Insurance Corp., Hartford, Conn., and Joseph Velez, previously vice president of defined contribution plan retirement services, SEI Corp., Wayne, Pa.
Two Minneapolis growth-oriented managers, Voyageur Asset Management and Marquette Banks, have allied to offer a turnkey investment program for midsized defined contribution plans called Advantage One.
The program provides full bundled 401(k) plan services.
Marquette will aid sponsors in plan design and will provide trust and record-keeping services. Voyageur will provide the investment vehicles, including mutual funds and separately managed accounts, and will contribute participant education and communications to the venture, said Jim Roberts, a Voyageur spokesman.