“Fiduciary friendliness starts with the
recognition that the fiduciary has a very
tough job, and our commitment is to
make that job easier.” —Ayers
don’t want any incentive to push
or prefer one investment option
over another. We feel that puts us
in the best position as a fiduciary
for our separate accounts, as well
as the best position for the plan
sponsor and his or her fiduciary
responsibility. There are a lot of
service providers that are not
revenue- or cost-neutral. Plan
sponsors with these providers
could face difficult questions from
participants who feel that expenses
have been allocated unfairly.
Securian Retirement’s history of
full disclosure and our longstanding
revenue-neutral stance aligns quite
well with helping plan sponsors
fulfill their fiduciary responsibilities.
What Securian Retirement’s Actual
Allocation Method, or “SA2M” for
short, does is pass back mutual
fund revenue sharing pro rata
based on the assets each individual
participant invests in a given
separate account. This is a practice
that, according to a recent white
paper authored by noted ERISA
attorneys Fred Reish and Bruce
Ashton, is very well situated with
how the Labor Department (DoL)
views the allocation of expenses.
The authors indicate, “Securian
Retirement’s method of allocating
revenue sharing effectively solves
the fiduciary issues by following
the actual allocation approach
considered by the DoL to be most
equitable. Thus, in our view,
SPONSORED SECTION
the Securian approach meets,
and possibly even exceeds the
requirements of ERISA to use a
prudent allocation method.”
Ayers: SA2M allows Kent and his
team to focus purely on investment
options that they view as the best
that the marketplace can offer
to participants and, when they
find those funds, they can focus
on identifying and selecting the
lowest-net-cost share-class option
available. That way, the participant
gets the best of both worlds: high-
quality funds and the lowest cost
available. They get that because
we don’t view revenue sharing as a
source of income.
Soldan: I think it’s significant that
we pass revenue sharing back to
participant accounts on a daily
basis, even though we don’t receive
those funds from the portfolio
managers until later, usually at
quarter end.
PS: What kind of technology are
you using to help you keep up with
that?
Peterson: It starts with having a very
talented technology team; Securian
has been ranked in the top 100 Best
Places to Work in IT for the last 16
years according to Computerworld
and was ranked second overall
in 2011. I think that is because
we tackle difficult challenges in
a creative way. When we first
encountered revenue sharing, the
easiest thing would have been
just to keep it and not disclose it
and follow a pretty commonplace
practice of the industry. However,
we took a different road, and that
meant we needed to create new
technology to take that revenue
sharing and put it back into
participant accounts in advance, as
Tim has mentioned, and we do that
revenue pass-back on a daily basis.
I wouldn’t call it rocket science, but
I would say that it was innovative,
and it was and still is outside the box
relative to our peers.
Ayers: We focus on innovative,
thoughtful, forward-thinking plan
products and services. At the end
of the day, where they deviate from
the industry, we’re glad to help plan
sponsors and advisers understand
the merits of our approach.
PS: How do participants react to
this kind of disclosure?
Peterson: We’ve always been
good at full disclosure to our plan
participants in regard to the total
expenses that are being charged
to their particular plan assets.
However, if you’re not careful, you
can get too granular, and that result
can be a little overwhelming to the
participant.
Ayers: Through the years, we’ve
