ROSELAND, N.J. - Automatic Data Processing Inc. has reached an agreement in principle to acquire employee benefits consultant Williams, Thacher & Rand Inc., New York.
ADP provides defined contribution plan record-keeping services to just 1,000 small companies, those with fewer than 100 employees, despite its huge presence as the largest provider of payroll processing in the United States, said Richard Berke, ADP's vice president of human resources.
WTR offers full-service daily valuation record keeping and employee benefit administration to midsized plans, said Jeff Levy, a principal.
WTR will remain relatively independent in its operations, and is likely to expand both personnel and computer systems capabilities as the business expands, said officials from both companies.
Mr. Berke, who will become president of ADP's newly created benefits service division, said the new venture will begin by targeting the company's 25,000 payroll clients with between 100 and 1,000 employees.
"We've done a lot of market research, and our clients are telling us that their record-keeping needs are not being serviced by the record-keeping community at large, which focuses on larger plans," he said.
"Smaller employers would prefer to do one-stop shopping for both payroll and record keeping for their defined contribution plans. It's a natural fit and we are talking to them all on every payday, anyway. This is what this market has been waiting for," said Mr. Berke.
ADP also intends to provide private-label, turnkey record-keeping services for other financial institutions, such as regional banks, brokers and insurance companies. While ADP is not ready yet to add mutual funds and create a bundled, alliance-type 401(k) package, "it's something we'll be looking at," Mr. Berke said.
ADP and WTR hope to complete contract negotiations around Oct. 1, said Mr. Levy.
PURCHASE, N.Y. - Diversified Investment Advisors Inc. introduced two GIC alternative pooled separate account funds for institutional investors.
The Stable Value 3 Fund and the Stable Value 5 Fund carry three- and five-year durations, respectively, and are actively managed in diversified securities by Merganser Capital Management Corp., Cambridge, Mass., and Lotsoff Capital Management, Chicago, respectively.
The book-valued funds feature an AA+ wrap provided by AUSA Life Insurance Co., a subsidiary of Diversified's parent company, AEGON USA, New York. The minimum investment in each fund is $2 million; fees are 50 basis points plus $500 per month, which covers investment management, wrap, custody and administration.
Diversified also will introduce Oct. 1 an institutional variable annuity program.
Diversified uses a Hub & Spoke structure for its institutional investment management; commingled portfolios are centrally managed by external money managers and receive investments from a number of different investment vehicles or spokes, such as mutual funds, collective trusts and separate accounts.
The variable annuity program, also known as a registered insurance company separate account, adds a new series of spokes to nine of the central Diversified commingled funds, ranging from a money market fund to an international equity fund.
Available only to variable annuity clients is a socially responsible balanced hub fund managed by Calvert Asset Management Co. Inc., Boston, which will be attractive to the hospital portion of the 403(b) market, a target of the new variable annuity, said Chris Cummin, a Diversified spokesman.
The variable annuity also features three fixed-interest accounts managed by AUSA Life.
Plan administrator First Trust Corp., Denver, and investment manager Fred Alger Management Inc., Jersey City, N.J., have teamed up to offer a daily valued, bundled 401(k) plan product at reduced fees. Selection of the Alger Defined Contribution Trust will result in a trustee and record-keeping fee reduction of up to 50% of what the two firms would normally charge for the service, officials for both companies say.
The Alger DCT is an open-end, no-load, no-fees mutual fund with four distinct investment portfolios: growth, small-cap, midcap growth and leveraged allcap.
Sponsors may include mutual funds from other fund families, but will be charged according to the regular fee schedule.
NEW YORK - Bank Leumi Trust Co. of New York has introduced a turnkey defined contribution product, The 401(k) Connection, a fully bundled service for plans with as few as 25 participants.
Fidelity Institutional Services Co., Boston, is providing the private-label product, which will give clients daily funds valuation, trust and record-keeping services, automated voice-response systems and a diversified range of 13 Fidelity Advisor mutual funds. Bank Leumi will provide participant investment education.
BALTIMORE - T. Rowe Price Associates Inc. introduced a Spanish language service on its automated voice-response systems for defined contribution plan participants.
Spanish-speaking operators will help plan participants with transactions, account inquiries and investment guidance. T. Rowe Price receives about 100 calls per day from Spanish-speaking employees of it clients.
Several fund prospectuses also are offered in Spanish.
CHICAGO - Kemper Financial Services now provides an educational video, "Your Retirement Plan: Investment Basics," for Kemper defined contribution plan participants.
The 20-minute video offers basic investment instruction, including risk/return correlations, inflation effects and interest rate movements, and provides a description of mutual funds and their operations.
Kemper officials said future videos will deal with increasingly complex investment issues.
ST. PAUL, Minn. - Minnesota Mutual Life Insurance Co. is providing a modular participant education program, based on life stage needs, to its bundled defined contribution plan clients.
The multimedia program relying on print materials, newsletters, enrollment kits, video and interactive software, and can be customized to incorporate specific plan features and investment options.
The Retirement Income Builder is divided into two modules. Module I focuses on the accumulation stage of an employee's retirement planning, and educates employees on the need to save and on basic investment techniques. The software portion of the program helps participants determine asset allocation.
Module II aids employees at or near retirement, with distribution options, retirement planning and issues concerning time management after retirement. Module II also may be used by defined benefit plan clients.
BOSTON - Consultant Kanon Bloch Carre has hired Acumen Financial to provide personal investment education programs for the KBC's corporate defined contribution plan clients.
Kanon Bloch Carre consultants will use Acumen's asset allocation software services to develop life cycle portfolios, using a defined contribution plan's existing investment options on an individual participant basis. Bill Dougherty, president, said many of the firm's clients simply don't want to add specially designed life cycle mutual funds or commingled funds, when the same effect can be gained by helping participants develop their own balanced asset allocations based on the same age and risk parameters used by life cycle funds.
