CHICAGO -- Plan executives at the law firm Barack Ferrazzano Kirschbaum Perlman & Nagelberg knew that a diversified selection of investment options would entice employees to participate in the law firm's 401(k) plan, but to lure busy employees to meetings telling them about the plan's new investment options, they resorted to distributing Snickers candy bars.
Plan executives at the Chicago-based law firm hired City National Investments, Beverly Hills, Calif., as its semibundled provider in October and jettisoned all but one of the plan's investment options, said Roberta Rudolph Salas, the firm's benefits administrator. The incumbent record keeper was National Benefits Services, Chicago, Ms. Rudolph Salas said. DiMeo Schneider & Associates LLC, a Chicago-based consulting firm, assisted.The firm also instituted a tiered approach to the investment menu by adding a set of lifestyle funds as a tier and a self-directed brokerage account as another tier. A third tier, composed of core funds, was expanded to 10 options from six.
But before Barack Ferrazzano plan executives could entice busy lawyers and their staff into the re-engineered plan, they had to get them to put lawyering aside to attend an education meeting, she said. For that, Ms. Rudolph Salas attached Snicker bars to written plan communication materials and provided lunch during the meetings.
"I just wanted to draw their attention," she said. The plan "got a lot of buzz."
Explaining the switch to City National from National Benefits Services, Ms. Rudolph Salas said, "We needed someone who could provide us with specialized and personalized record keeping."
For example, many of the firm's employees trade with brokers outside of their 401(k) accounts and wanted to use their own brokers within their defined contribution plan, she said. Moreover, the firm had more than tripled in size and balance forward record keeping where account balances are valued quarterly was no longer viable. The firm wanted to update the plan and switch to a service provider who could offer daily record keeping and Internet based services she said.
Core investment lineup
Among its core investment options, the plan retained the Dreyfus Retirement Services' Stable Value Fund and added City National's Charter Prime Money Market; Pacific Investment Management Co.'s Total Return; Dreyfus Investment Advisors Inc.'s Standard & Poor's 500; Washington Mutual Investment's large-cap value; MassMutual Financial Group's Investors Growth; Cohen & Steers Realty; American Century's international growth; Wachovia Asset Management's Special Value and INVESCO Inc.'s Small Company Growth. The lifestyle funds are Fidelity Investments' Freedom Income.
One of City National's focal points in the defined contribution plan market is large professional firms, said Vernon Kozlen, executive vice president of City National Investments. "What we are seeing in these plans are participants with significantly large account balances."
As the professional firms grow, their defined contribution plans become more complex, Mr. Kozlen said. Firms need plans that appeal to several types of investors, from senior partners to clerical staff, he explained. Moreover, their 401(k) plans are often the result of several consolidations of other plans.
"So, you end up with a plan that has major contingencies with different classes of participants with different interests and different needs," he said. "The benefit plans need to provide features for all of those contingencies."
That's where the three tiers of investment options as well as online record keeping for participants and plan executives came in, he said. Among the other Internet services offered are loan modeling, retirement planning and education.