ATLANTA - John H. Harland Co. hired Merrill Lynch Investment Managers as its semibundled service provider and increased the investment options to 12 from 10 in its $200 million 401(k) plan, said Rob White, director of benefits.
Executives also changed all but two of the investment options, Mr. White added.
The incumbent was American Express Retirement Services. "We were with American Express for six or seven years and we feel that it is always a good idea to look at the marketplace from time to time," Mr. White said. Once they analyzed the different choices with the help of their consulting firm, Palmer & Cay, Savannah, Ga., Harland executives decided they wanted a company that could provide more investments, technology, record keeping and administration, he said.
"We analyzed all of the Merrill Lynch investment choices and filled in a couple of gaps in the investment menu," he explained.
Retained in the plan were the Janus Adviser Worldwide and Templeton Foreign funds. The new funds are PIMCO Total Return, PIMCO's Renaissance midcap value, Oakmark Equity and Income, Fidelity's midcap growth equity, Merrill Lynch's Fundamental Growth and Standard & Poor's 500 funds, Lord Abbett Affiliated Fund, Franklin Balance Sheet Investment and AIM Small Cap Growth Fund. The fund lineup also includes the so-called Retirement Income Fund, a portfolio that initially will represent a blend of the Merrill Lynch Institutional Fund and the plan's former stable value selection, the American Express Trust Income Fund II. All future contributions to the Retirement Income Fund and proceeds from the maturing American Express Trust Income Fund, which invests in a pool of insurance and bank investment contracts, will be invested in the Merrill Lynch Institutional Fund. According to the education brochure, the plan administrators expect the American Express portfolio will be completely liquidated by the end of this year.
The changes were made in January.
`Goal manager'
The plan also includes Merrill Lynch's "goal manager" portfolios. These portfolios - offered in conservative to moderate, moderate and moderate to aggressive approaches - automatically rebalance quarterly, said Cynthia Hayes, director of institutional marketing for Merrill Lynch's retirement group, Pennington, N.J. Each is composed of the same seven funds from the plan's new investment options: Merrill Lynch's Institutional and Fundamental Growth funds, PIMCO Total Return, Lord Abbett Affiliated, Franklin Balance Sheet, AIM Small Cap and Templeton Foreign.
However, Mr. White said company executives do not feel they can tell employees how much to put into the goal manager approach.
"It's their decision whether they put all of their money in it or split it up," Mr. White said. "We gave them these tools because one of the biggest things I was hearing was, `I don't want to make these choices. I want a tool that does it."'
Harland stopped short at providing investment advice. "We decided against advice due to fiduciary liability concerns," Mr. White said. "We're waiting to see what happens in Congress. There are a lot of new bills."
It also was the feeling of the company executives that employees and the company both have responsibilities, he said. "We had responsibility to offer employees as much choice as we could, but our responsibility did not extend to offer advice. It's their responsibility to explore all their options and to seek their own financial advice. Every employee's situation is different."
There is no company stock investment option. The company matches 50 cents on the dollar up to 6% of pay in cash. In addition, Harland in 2001 began making a performance contribution to the plan based on the company's profitability.
Retaining talent
Harland executives wanted to make sure the company could continue to attract and retain high-quality talent, he said.
Harland executives wanted to develop an education campaign that gave employees a great deal of information upfront, including the importance of saving and their 401(k) program, according to Mr. White.
Participation rose to 72% as of Feb. 12 from 66% Dec. 31. At the same time, the average number of funds in which participants invest rose to 3.9 from 3.7 funds.
