L.A. City Council asking why trustees for DC plan hired Nationwide
Skip to main content
pilogo-NEW
Subscribe
  • Subscribe
  • My Account
  • login
  • NEWS
    • Asset owners and the coronavirus
    • Alternatives
    • Consultants
    • Coronavirus
    • Defined Contribution
    • ESG
    • Frontlines
    • Hedge Funds
    • Investing / Portfolio Strategies
    • Money Management
    • Pension Funds
    • People Moves
    • Private Equity
    • Real Estate
    • Searches & Hires News
    • SECURE Act
    • Special Reports
    • WorldPensionSummit
    • Ron Schmitz
      Pandemic drives faster transition for Virginia to private markets
      Mubadala Investment Co. logo
      Mubadala draws on portfolio in coronavirus fight
      T.J. Carlson
      Texas Muni reduces downside risk during pandemic, finding opportunities now
      Scott Davis
      ‘Triage plan’ at Indiana system helped stem losses
    • Coller Capital collects $9 billion with latest secondaries fund
      Directional signs respresenting types of traditional and alternative investments
      Setter: Alternative secondary deals drop 27.7% in 2020
      Kennedy Lewis raises $2.1 billion for latest opportunistic credit fund
      Emma Davies
      Octopus Ventures chooses co-CEO
    • Bill Foley
      Blackstone to sell Alight to SPAC in $7.3 billion deal
      Jason Schwarz, chief operating officer of Wilshire,
      New owners have big plans for future of Wilshire
      Amy Hsiang
      Meketa picks new public markets manager research director
      Will Martindale
      Cardano Group chooses group head of sustainability
    • CalSTRS participant retirements jump in second half of 2020
      Steve Foresti
      Despite a truly frightening March, funds ended year in great shape
      Mexico manages breakthrough in virus-marred year
      Coronavirus throwing retirement systems into a deepening hole
    • Jan Jacobson
      High-court ruling thwarts ERISA stock-drop lawsuits
      Joni Tibbetts
      Principal counts on advisers to get word out on PEPs
      Kenneth J. Munro III
      Empower names new national sales director
      Fidelity cuts target-date asset threshold for lower fees
    • Shannon O'Leary
      Resisting diversity could lead to termination
      Ontario Teachers commit to net zero emissions by 2050
      LaSalle Investment Management taps 2 for new ESG roles
      Sovereign credit ratings vulnerable to ESG risks — Moody’s
    • Ryan Tedder
      Strike up the band: KKR fund takes majority stake in Ryan Tedder catalog
      Helen Dean
      NEST’s Helen Dean earns U.K. recognition for service
      Hawk's Nest dam
      Brookfield donates golf course for firefighter training center
      Gifford Fong
      Old ties help bring local version of JOIM to mainland China
    • Shanghai skyline
      Global hedge funds struggle even in a more open China market
      The Sun Hung Kai Properties Ltd. logo is displayed on the Sun Hung Kai Centre building in Hong Kong on Sept. 13, 2018
      SHK spins out East Point Asset Management
      Man holding a business card with Hedge Fund written on it
      Hedge funds chalk up decade’s best returns in 2020 – HFR
      New hedge fund launches surpass liquidations in third quarter
    • Investors ready for change as Democrats take control
      George Antonopoulos
      SPAC launches leap, but institutions are wary
      Inflation fears are good news for ETFs targeting TIPS
    • Rene Buehlmann
      Standard Life Aberdeen makes senior leadership changes in APAC, U.K. and EMEA
      State Street, Northern Trust both prepare for layoffs
      Marques Benton
      Loomis Sayles chooses first chief diversity officer
      Standard Life Aberdeen CEO Stephen Bird
      Standard Life Aberdeen CEO: Some staff won’t get bonuses
    • CalSTRS participant retirements jump in second half of 2020
      Marcie Frost
      California pension funds learning from experience
      A sign outside California Public Employees' Retirement System headquarters in Sacramento
      CalPERS expecting to announce new CIO this quarter
      The Great Seal of the State of New Mexico in the House of Representatives chamber within the New Mexico State Capitol in Santa Fe
      New Mexico PERA executive director taking new position
    • Rene Buehlmann
      Standard Life Aberdeen makes senior leadership changes in APAC, U.K. and EMEA
      The Great Seal of the State of New Mexico in the House of Representatives chamber within the New Mexico State Capitol in Santa Fe
      New Mexico PERA executive director taking new position
      Marques Benton
      Loomis Sayles chooses first chief diversity officer
      Charles Wu
      State Super appoints chief investment officer
    • Pension funds continue private equity investing spree
      Big jump in private equity AUM expected over next 5 years
      Thoma Bravo takes in $22.8 billion for 3 funds
      Jason Thomas
      Data, technology become new prized possessions
    • Chiang Ling Ng
      Hines hires first head of Asia-Pacific real estate investments
      Brand new apartment building on sunny day in spring with blooming trees
      Real estate returns forecast to trend lower – report
      Ivanhoe Cambridge Inc. signage is displayed outside the company's office near Bay Street in Toronto on Aug. 29, 2011
      Ivanhoe Cambridge, PAG announce joint venture for Japan logistics investments
      Residential buildings in Hong Kong on Feb. 20, 2020
      KKR closes first Asia-Pacific real estate fund at $1.7 billion
    • Retirement cartoon
      Hopes rising for retirement readiness in 2021
      Neal and Brady
      Retirement security could be only issue both sides accept
      David Ireland
      Sponsors returning to questions about in-plan annuities
      Shawn O'Brien
      Annuities coming to target-date funds, but not right away
    • Retirement in emerging markets
      Outlook 2021
      The top 10 stories of 2020
      The best places to work in money management
    • U.S. still a key market for investors
      Collected coverage of P&I's 2020 WorldPensionSummit
      Pedestrians pass a large advertisement on the Arndale Center shopping mall reading 'Act now to avoid a local lockdown' in Manchester, England
      COVID-19 puts new opportunities and risks on the agenda - WPS panelists
      Screens display stock price information over the trading floor of the NYSE Euronext exchange in Paris
      Private assets will continue to grow in portfolios – WPS panelists
  • Data
    • Research Center
    • Searches & Hires Database
    • Searches & Hires News
    • RFPs
    • Charts / Infographics
    • Sponsored Research
    • Trackers
    • Q2 2020 searches and hires overview report
      Q2 2020 money manager M&A activity summary
      Q2 2020 legal overview report
      Q1 2020 searches and hires overview report
    • Houston Firefighters puts $180 million into 3 funds
      LACERA allocates up to $442 million with 6 managers
      BBC Pension Scheme re-signs HSBC as global custodian
      Stanislaus County Employees earmarks $20 million to buyout fund
    • Houston Firefighters puts $180 million into 3 funds
      LACERA allocates up to $442 million with 6 managers
      BBC Pension Scheme re-signs HSBC as global custodian
      Stanislaus County Employees earmarks $20 million to buyout fund
    • International Small Cap Manager Services
      Financial Expertise
      Passive Index Manager Services
      Emerging Markets Equity Investment Management Services
    • Taiwan Semiconductor’s No. 1 in the emerging markets book
      U.S. fixed-income returns post another positive year
      Nasdaq delivers an impressive year
      U.S. dollar's recent decline continues
    • Institutional Investors: Shared Expectations, Divergent Paths
      Global Investor Study 2016
      Workplace Financial Wellness
    • U.S. Endowment Returns Tracker
      Pension Fund Returns Tracker
      Earnings Tracker
      Corporate Pension Contribution Tracker
  • Insights
    • Opinion
    • White Papers
    • Industry Voices
    • Letters to the Editor
    • Partner Content
    • Publisher's Update
    • Infrastructure cartoon
      You must go big on infrastructure, Mr. President
      Retirement cartoon
      Hopes rising for retirement readiness in 2021
      view gallery
      25 photos
      Cartoons depict a year like no other
      view gallery
      25 photos
      2020 in editorial Cartoons
    • GP-LED OPPORTUNITIES AT THE SMALLER END OF THE MARKET
      Gold Outlook 2021
      Bond ETFs show maturity during Covid market mayhem
      2021 Outlook: A rousing recovery
    • Charles E.F. MIllard
      Commentary: It’s time to make 401(k) plans into real pension plans
      Michael McNally
      Commentary: New ‘investment-plus’ test poses risks to private equity investors
      Adam Waterous
      Commentary: Institutions urged to act now on opportunities created by current global oil disruption
      Ron Lagnado
      Commentary: Straw man critiques don’t hold up in face of real world success
    • Writer using a typewriter
      OCIO industry needs to adopt GIPS
      Writer or journalist workplace. stock illustration
      Even as it assails China, Trump administration emulates it
      Skeptical of Main Street support for proxy adviser proposal
      Focus on manager diversity pushes asset owners’ to walk the talk
    • Sponsored Content By MassMutual
      Leveraging Data to Manage Risk
      Sponsored Content By iShares
      ETFs are becoming a cornerstone of insurance equity portfolios
      Sponsored Content By Aberdeen Standard Investments
      Taking a passive approach to the hedge-fund universe
      Sponsored Content By World Gold Council
      Gold: the most effective commodity investment
    • Help us help you by supporting quality journalism
      You Must Believe in Spring
      Everything Must Change
      Tomatoes & Investments
  • Multimedia
    • Videos
    • Webinars
    • Polls
    • Slideshows
    • Charts / Infographics
    • watch video
      1:24
      U.S. stocks were 2020’s comeback kid
      watch video
      1:23
      Outlook 2021
      watch video
      1:52
      Buy gold's pullback?
      Coronavirus and the S&P 500: 2020
    • Getting Back to Normal: How to Creatively Manage Fixed Income Portfolios in a Rising Rate Environment
      Lessons From 2020: OCIO Model Passes Major Test of Governance
      What might a Biden DOL and SEC mean for retirement plans?
      Staying on target with target-date funds
    • POLL: Retirement issues in 2021
      POLL: Money managers' priority in Asia-Pacific region
      POLL: Retirement issues in the presidential election
      POLL: The S&P 500 in the third quarter
    • view gallery
      9 photos
      Coronavirus and the markets
      view gallery
      22 photos
      The 1,000 largest retirement funds: 2020
      view gallery
      10 photos
      Outlook 2020
      view gallery
      10 photos
      2019 as seen through the eyes of Roger
    • By the Numbers for January 2021
      Riskwatch for Q4 2020
      Graphic: A look at hiring activity in 2020
      Taiwan Semiconductor’s No. 1 in the emerging markets book
  • Events
    • Conferences
    • Webinars
    • Defined Contribution Spring Virtual Series
      DC Investment Lineup Virtual Series
      ESG Investing Virtual Series
      Private Markets Virtual Series
    • Getting Back to Normal: How to Creatively Manage Fixed Income Portfolios in a Rising Rate Environment
      Lessons From 2020: OCIO Model Passes Major Test of Governance
      What might a Biden DOL and SEC mean for retirement plans?
      Staying on target with target-date funds
  • Careers
  • Research Center
MENU
Breadcrumb
  1. Home
  2. Print
September 20, 2004 01:00 AM

L.A. City Council asking why trustees for DC plan hired Nationwide

Phyllis Feinberg
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    LOS ANGELES — The Los Angeles City Council on Sept. 14 voted to investigate the hiring of Nationwide Retirement Solutions Inc. by the $1.8 billion City of Los Angeles Deferred Compensation Plan.

    The council sent the issue to its personnel committee, which has scheduled a hearing for Sept. 29. The full council is expected to discuss the results of the hearing Oct. 5.

    The move follows an outcry over the vote by the plan's board of trustees that replaced Great-West Retirement Services despite the recommendation of the plan's staff and investment consultant to retain the firm. Great-West's contract is due to expire Dec. 31.

    The plan's consultant, Mercer Investment Consulting, Richmond, Va., and staff recommended Great-West over Nationwide, which was selected in a 4-2 vote of the board Aug. 17.

    Plan officials have received more than 1,000 messages from active and retired plan participants asking that the board change its decision and rehire Los Angeles-based Great-West, according to Steven Montagna, senior personnel analyst for the plan. Most of those participants, along with the two board members who opposed Nationwide's hiring, are most concerned about the Columbus, Ohio-based firm's fees, which are 25% higher than Great-West's, according to reports of the numbers submitted in the firm's bids. All fees are paid by plan participants.

    Great-West, which had been administrator since 1999, actually proposed making a small cut in its fees, according to reports about its proposal.

    Nationwide officials, in a statement, said the firm was hired "on the basis of our superior education and service model."

    Lobbyists at meetings

    Nationwide representatives extensively lobbied plan board members in an effort to get the contract, according to Margaret Whelan, general manager of the city's personnel department and a plan board member. In the last six months, at least three Nationwide lobbyists were at each board meeting, she added. Ms. Whelan voted in favor of Great-West, because of its lower fees and she said their service was good.

    Michael J. Galvin, vice chairman, who voted for Nationwide, "was partisan (toward Nationwide) from the get-go," said a source close to the board who asked not to be identified.

    Mr. Galvin, in an interview with Pensions & Investments, denied being biased. He said he made his decision after the presentations made by both companies and he voted for Nationwide because of the education services and "services to the membership" promised by the firm. He said he thought the better education services were particularly important to the city's blue-collar workers who don't have much financial knowledge.

    Also, the 25% fee increase is actually just $10 a year per participant, Mr. Galvin said.

    The source who asked not to be identified also said that Mr. Galvin had a personal friendship with Darlene Kuba, one of the Nationwide lobbyists; Mr. Galvin said he has known Ms. Kuba for many years in her capacity as a lobbyist but has no personal relationship with her.

    Another board member who voted for Nationwide, Javier Romano, said the reasons for picking the firm were "pretty obvious. They were going to provide more services." He would not elaborate.

    Nationwide planned to have 11 local staff members servicing the plan, according to the company's statement; there are only four local Great-West staff members under the current contract, the statement read. Also, Nationwide said it planned to a far greater number of "employee consultations" over the five-year term of the contract, than Great-West.

    However, Ms. Whelan and fellow board member Shelley Smith, who also voted for Great-West, said in a memo they sent to the City Council that they were "deeply skeptical" of that argument. "It has not been established that the plan currently has a staffing deficiency," according to the memo. They pointed out that Great-West already holds almost 200 group meetings a year and that Nationwide's proposal of 1,100 meetings annually would equate to "approximately five meetings held per working day."

    Advice question

    Nationwide also included the cost of its investment advice program in its overall fee, despite having been asked in the RFP to quote those services separately, the memo said. In November 2002, the plan's board decided not to pursue an investment advice program until it could be provided through existing revenue streams, thus avoiding a fee increase, the memo said.

    Additionally, the Whelan-Smith memo noted Great-West could offer an investment advice program whenever the board decides to implement one. The memo goes on to say an investment advice program should not involve an across-the-board fee increase and, if offered, should be offered on a voluntary basis, so that only the participants who want advice have to pay for it.

    City Councilman Dennis Zine, who presented the motion to assume jurisdiction over the vote, said in the motion that "the actions of the board are even more puzzling in light of its responsibilities set forth in the (City's) Administrative Code," according to Brian Perry, a deputy to Mr. Zine. Under the code, the board is authorized to approve and execute new contracts with plan administrators as long as they have "no new costs to either the city or to any participants in the plan," according to the motion.

    The code also says the board must periodically conduct sample surveys of plan participants "to determine member satisfaction, complaints, ideas for improvement of the plan and to obtain similar information," according to the motion.

    Even if the council eventually vetoes the Nationwide decision, it does not have the authority to hire an administrator for the plan. "The decision is still the board's to make," said Mr. Perry.

    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    Targeting millennials: Author, niece put his latest book to music
    Targeting millennials: Author, niece put his latest book to music
    How low is low? Projections say it's not low enough
    How low is low? Projections say it's not low enough
    Research for Institutional Money Management
    Sponsored Content: Research for Institutional Money Management
    sponsored
    Events
     
     
    Sponsored
    White Papers
    GP-LED OPPORTUNITIES AT THE SMALLER END OF THE MARKET
    Gold Outlook 2021
    Bond ETFs show maturity during Covid market mayhem
    Global gold-backed ETFs: A popular gateway to the gold market
    2021 Outlook: A rousing recovery
    Climate change and emerging markets after Covid-19
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    pilogo-NEW
    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    150 N. Michigan Ave.
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • NEWS
      • Asset owners and the coronavirus
      • Alternatives
      • Consultants
      • Coronavirus
      • Defined Contribution
      • ESG
      • Frontlines
      • Hedge Funds
      • Investing / Portfolio Strategies
      • Money Management
      • Pension Funds
      • People Moves
      • Private Equity
      • Real Estate
      • Searches & Hires News
      • SECURE Act
      • Special Reports
      • WorldPensionSummit
    • Data
      • Research Center
      • Searches & Hires Database
      • Searches & Hires News
      • RFPs
      • Charts / Infographics
      • Sponsored Research
      • Trackers
    • Insights
      • Opinion
      • White Papers
      • Industry Voices
      • Letters to the Editor
      • Partner Content
      • Publisher's Update
    • Multimedia
      • Videos
      • Webinars
      • Polls
      • Slideshows
      • Charts / Infographics
    • Events
      • Conferences
      • Webinars
    • Careers
    • Research Center