PLANSPONSOR - November/December 2017 - 58

DB FOCUS
Breaking Up With a Fund
Today's market regime stresses the sponsor/manager relationship
can lead to a manager replacement: poor
performance; changes in the manager's
organization, portfolio team or investment
process; disappointing customer
service; and high cost. " Most of the time,
a 401(k) committee can live with one of
these attributes being suboptimal, but if
more than one at a time is negative, or
the underperformance is dramatic and
sudden, the sponsor is likely to start a
search, " he observes.
Most managers, though, are hired
and fired on the numbers, says Christine
Loughlin, a partner at NEPC in Boston
and head of the consulting firm's DC
plan practice. " Managers' organizational
or portfolio manager changes are really
well-telegraphed today and don't lead to
as many terminations, so that, 80% of the
time, the trigger for a manager change is
portfolio underperformance. "
The measurement of investment
performance has evolved to a very complex
level, so which of the many statistics
available-performance vs. benchmarks,
peer groups, consultants' ratings or riskadjusted
measures-offers the most
informed view? " There is no litmus test to
apply to manager performance, because a
lot depends on the asset class and market
environment, " DeForrest says.
" Sponsors want a long time-frame
" T
hey say that breaking up is hard
to do, " declares Neil Sedaka's
1962 classic pop song. And not
just for teen romances, either: Having to
remove a carefully chosen fund manager
whose decisions have failed to deliver, and
then settling on a capable replacement,
is one of the most difficult tasks defined
contribution (DC) plan sponsors may
undertake.
" There are few situations in overseeing
a qualified retirement plan more
challenging than replacing an investment, "
observes Josh Ulmer, corporate
retirement director with the SeaPort
Group at Morgan Stanley, Portland,
Oregon, and 2017 Retirement Plan
Adviser of the Year. " In this era of cost
control, financial wellness and indexation,
I believe investment selection and
evaluation have been underemphasized. "
At consulting firm Callan Associates
in San Francisco, Senior Vice President
Greg DeForrest sets out six factors that
58 PLANSPONSOR.com November-December 2017 Art by Ellen Weinstein
for their participants and want to avoid
frequent changes, " he explains. " We try
to see that the time period for measuring
performance is appropriate for a given
strategy and preach more patience than
action. "
Micah Fannin, senior investment
consultant in the Chicago office of Mercer
Investments, points out the value of riskadjusted
measures, taken over full cycles
of rising and falling markets: " Sponsors
can't just evaluate over fixed periods of
three and five years, " he says. " Today's

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PLANSPONSOR - November/December 2017

Table of Contents for the Digital Edition of PLANSPONSOR - November/December 2017

Seeking Value
2017 DC Survey: Plan Benchmarking
2017 Research Year in Review
Owning a Piece of the Firm
Breaking Up With a Fund
Reporting Requirements
PLANSPONSOR - November/December 2017 - Cover1
PLANSPONSOR - November/December 2017 - Cover2
PLANSPONSOR - November/December 2017 - 1
PLANSPONSOR - November/December 2017 - 2
PLANSPONSOR - November/December 2017 - 3
PLANSPONSOR - November/December 2017 - 4
PLANSPONSOR - November/December 2017 - 5
PLANSPONSOR - November/December 2017 - 6
PLANSPONSOR - November/December 2017 - 7
PLANSPONSOR - November/December 2017 - 8
PLANSPONSOR - November/December 2017 - 9
PLANSPONSOR - November/December 2017 - 10
PLANSPONSOR - November/December 2017 - 11
PLANSPONSOR - November/December 2017 - 12
PLANSPONSOR - November/December 2017 - 13
PLANSPONSOR - November/December 2017 - 14
PLANSPONSOR - November/December 2017 - 15
PLANSPONSOR - November/December 2017 - 16
PLANSPONSOR - November/December 2017 - 17
PLANSPONSOR - November/December 2017 - 18
PLANSPONSOR - November/December 2017 - 19
PLANSPONSOR - November/December 2017 - 20
PLANSPONSOR - November/December 2017 - 21
PLANSPONSOR - November/December 2017 - Seeking Value
PLANSPONSOR - November/December 2017 - 23
PLANSPONSOR - November/December 2017 - 24
PLANSPONSOR - November/December 2017 - 25
PLANSPONSOR - November/December 2017 - 26
PLANSPONSOR - November/December 2017 - 27
PLANSPONSOR - November/December 2017 - 28
PLANSPONSOR - November/December 2017 - 29
PLANSPONSOR - November/December 2017 - 2017 DC Survey: Plan Benchmarking
PLANSPONSOR - November/December 2017 - 31
PLANSPONSOR - November/December 2017 - 32
PLANSPONSOR - November/December 2017 - 33
PLANSPONSOR - November/December 2017 - 34
PLANSPONSOR - November/December 2017 - 35
PLANSPONSOR - November/December 2017 - 36
PLANSPONSOR - November/December 2017 - 37
PLANSPONSOR - November/December 2017 - 38
PLANSPONSOR - November/December 2017 - 39
PLANSPONSOR - November/December 2017 - 40
PLANSPONSOR - November/December 2017 - 41
PLANSPONSOR - November/December 2017 - 42
PLANSPONSOR - November/December 2017 - 43
PLANSPONSOR - November/December 2017 - 44
PLANSPONSOR - November/December 2017 - 45
PLANSPONSOR - November/December 2017 - 2017 Research Year in Review
PLANSPONSOR - November/December 2017 - 47
PLANSPONSOR - November/December 2017 - 48
PLANSPONSOR - November/December 2017 - 49
PLANSPONSOR - November/December 2017 - 50
PLANSPONSOR - November/December 2017 - 51
PLANSPONSOR - November/December 2017 - 52
PLANSPONSOR - November/December 2017 - 53
PLANSPONSOR - November/December 2017 - Owning a Piece of the Firm
PLANSPONSOR - November/December 2017 - 55
PLANSPONSOR - November/December 2017 - 56
PLANSPONSOR - November/December 2017 - 57
PLANSPONSOR - November/December 2017 - Breaking Up With a Fund
PLANSPONSOR - November/December 2017 - 59
PLANSPONSOR - November/December 2017 - Reporting Requirements
PLANSPONSOR - November/December 2017 - 61
PLANSPONSOR - November/December 2017 - 62
PLANSPONSOR - November/December 2017 - 63
PLANSPONSOR - November/December 2017 - 64
PLANSPONSOR - November/December 2017 - Cover3
PLANSPONSOR - November/December 2017 - Cover4
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