ROCKFORD, Ill. -- The SwedishAmerican Health System is revamping its defined contribution plans, adding an unusual twist.
SwedishAmerican, with $25 million in 401(k) assets and $49 million in 403(b) assets, hired T. Rowe Price Associates Inc., Baltimore, as bundled provider, effective Oct. 1. Previously, the plans were unbundled, with record keeping provided by Howard Johnson & Co., Seattle, and consulting from Wurts & Associates, Seattle.
As part of the revamp, plan participants now may choose to pay Strategic Financial Concepts Inc., Clarendon Hills, Ill., a fee for making all of their asset allocation and investment decisions, said Tom Koelbl, SwedishAmerican vice president and head of human resources.
SFC, which takes a co-fiduciary role, charges 35 basis points. For example, someone with $4,000 in a 401(k) account would be charged $1.17 a month, or $14 a year.
The program is unique in that SFC is acting as an investment adviser for the participant -- one step beyond an advice giver. Mr. Koelbl expects many of the 2,460 participants to choose to use SFC; in fact, SFC will be the plan's default option.
Fund performance will be reviewed monthly by SFC and individual portfolios rebalanced quarterly, said Carl Londe, SFC chief executive officer. A participant's risk profile will be re-evaluated annually.
SFC Director Michael Falk, whose background is in financial education, makes all asset allocation and fund decisions. Swedish is SFC's first client for this service.
Mr. Koelbl explained the reason for the overhaul: "Our plan was not performing well and there were service issues as well. They were very good funds when we went in, but they became mediocre as a group.
"Employees were opening the newspaper and seeing 25% returns, but that's not what they were getting. They wanted more selection, and the physicians wanted access to any fund through a window."
Officials at Howard Johnson declined to comment on the termination. Wurts had a contractual obligation that kept it from continuing with Swedish after Howard Johnson was terminated, Mr. Koelbl said.
All of the mutual funds in the existing plan will be dropped. The 10 new funds will be T. Rowe Price Spectrum Income Fund, Dividend Growth, International Stock, Total Equity Market Stock Index, Equity Index 500 and Emerging Markets Stock; RS Emerging Growth; BT Pyramid Preservation Plus; Artisan Small Cap Value; and Dresdner RCM Large Cap Growth.
