Bob Reynolds continues to position Putnam as a thought leader in the retirement plan industry, most recently by tackling 401(k) fee disclosure in a transparent real-time fashion. Other 401(k) recordkeepers already say they disclose fees, but in those cases the disclosure is typically made at the time of the sale or annually. Putnam's is the first disclosure tool delivered through the Web that the MFWire.com is aware of.
Bob Reynolds Putnam Investments President, CEO
The Department of Labor (DoL) and possibly Congress, are both readying action on fee disclosure. For Putnam, which lost what had been a dominant position in the 401(k) market at the start of the last decade, the changes may open the door wider to its reentry to the business as a serious player.
Reynolds and other Putnam top brass revealed today plans for a June launch of a new web-based, real-time, on-demand system for employers to review their 401(k) plan fees (and the services provided for those fees). Down the road, Putnam is also expected to launch a web portal for disclosure to individual 401(k)-holding employees.
"Fee transparency is a vital element in helping create the more robust, reliable retirement system we've been calling for," stated Reynolds, CEO and president of Putnam. "So we're acting to really deliver on the values we've been advocating. We hope our commitment to openness can also help restore investors' trust and enable plan sponsors to better fulfill their fiduciary duties."
While Putnam was a part of Marsh its recordkeeping arm was sold to sister company Mercer (see The 401kWire, April 29, 2004). Since then, Marsh sold Putnam to Canada's Power Financial and Putnam returned to the recordkeeping business last year through an alliance with its new sister company Great-West Retirement (see The 401kWire, March 25, 2009). Putnam's new platform now runs on the Fascore product.
Company Press Release
BOSTON, May 18, 2010 — Putnam Investments today announced its commitment to offering the clearest, most complete disclosure of all fees and expenses in the workplace savings industry. “We believe working people and employers have a right to know exactly what they are paying for all elements of their 401(k)s and other retirement plans," said Putnam President and CEO, Robert Reynolds, "and that financial service providers have an obligation to offer them this information and explain the value they’re paying for.”
The new Putnam fee disclosures will be made available online for retirement plan sponsors beginning in early June. Later this summer, Putnam will provide retirement plan participants access to information on exactly what they are paying. “Fee transparency is a vital element in helping create the more robust, reliable retirement system we’ve been calling for,” Reynolds explained, “So we’re acting to really deliver on the values we’ve been advocating. We hope our commitment to openness can also help restore investors’ trust and enable plan sponsors to better fulfill their fiduciary duties.”
New disclosures to the plan sponsors that Putnam serves will cover all fees charged: investment management; servicing (including advisory fees); and recordkeeping. Plan sponsor will see much more than their total investment expense ratio. Their disclosure will also clearly and simply break out asset manager revenue from servicing revenue — and show the amounts paid to every investment management firm that offers funds to a retirement plan. It will explicitly identify advisor payments; and disclose specific dollar costs for recordkeeping and plan servicing — thereby clearly illustrating the value received by sponsors for each key component of the plan.
The plan participant disclosures, which will be available later this summer, will provide participants with fund expense ratios, transaction fees, and other information that will enable them to determine their own individual costs. The disclosures will be accompanied by a tutorial that helps explain what each charge is for, providing context for making investment choices.
"Full, clear disclosure is a vital element in building a stronger retirement savings system for America. The commitment we're making to enhanced fee and expense disclosures is our answer to that need which we hope will set new standards for transparency in our industry," said Reynolds.
"Plan sponsors and participants need detailed, useful, actionable information to make the right decisions. Transparency on fees can help plan sponsors identify the best value for their particular circumstances and plan participants understand the value that their plan provides them. We look forward to continuing our work with clients, advisors, policy makers, and colleagues across the industry to create the best possible retirement savings solutions for working Americans.”
“At Putnam, we think that retirement plan sponsors and participants have a right to clear, unambiguous information about the fees and expenses of their defined-contribution retirement plans — period. Providing this information is a fundamental obligation that we welcome and embrace,” said Edmund F. Murphy, III, Managing Director, Head of Defined Contribution, Putnam Investments. “Enhanced disclosure can really help plan sponsors meet their fiduciary responsibilities under the Employee Retirement Income Security Act (ERISA), to secure adequate value for the plan’s money. It has too often been very difficult for plan sponsors and their intermediaries to fulfill these responsibilities without plan administrators making their fees and expenses transparent. What we’re committing to today will change that — substantially.” (Please visit www.theretirementsavingschallenge.com for more details on Putnam’s approach to transparency.)
Putnam Investments and Retirement
Since Reynolds, a 30-year veteran of the retirement savings industry, became Putnam’s president and chief executive officer in 2008, the company has deepened its commitment to the retirement market and launched a series of innovations and initiatives to meet emerging customer needs. At the same time, Reynolds has called for sweeping public policy reforms to help meet America’s retirement savings challenge and prevent severe financial stress for future generations of retirees.
Putnam retirement initiatives include the launch of a Lifetime Income Analysis Tool, which shows 401(k) plan participants how much income their current retirement savings may generate in retirement compared with what they may need, and then offers actionable next steps. Putnam also offers a content-rich Roth IRA Conversion Resource Center targeted at advisors, brokers, and other financial professionals; an interactive Roth IRA Conversion Evaluator to assist investors in determining whether they should convert from a traditional IRA to a Roth IRA; and a new blog that Putnam created to keep investors and financial professionals alike informed about developments in Roth IRAs (www.rothirablog.com).
Putnam RetirementReady® Funds, the firm’s suite of 10 target-date/lifecycle retirement funds recently added target Absolute Return Funds* to its mix of underlying investments. RetirementReady Funds became the only suite of lifecycle funds to integrate absolute return strategies, which seek positive returns over time with less volatility than more traditional mutual funds. Employed in retirement portfolios, Putnam Absolute Return Funds are intended to pursue positive returns in up and down markets, to protect against the harmful effects of adverse investment returns, and to reduce volatility, particularly for investors in or near retirement.
Putnam also has expanded the services it offers to retirement plans and developed products to meet the needs of those planning for or already in retirement. The firm has created a platform that provides flexible and scalable services and solutions for advisors, consultants, and their plan sponsor clients in every segment of the retirement market.
About Putnam Investments
Founded in 1937, Putnam Investments is a leading global money management firm with over 70 years of investment experience. The firm was recently ranked #1 out of 61 fund families, based on its funds’ performance during 2009, in a Lipper/Barron’s Fund Families Survey. Putnam is a leader in product innovation, and is the first mutual fund family to offer a full suite of Target Absolute Return Funds and a complete suite of Global Sector Funds. At the end of April 2010, Putnam had $119 billion in assets under management, including mutual fund assets of $65 billion and institutional assets of $54 billion. Putnam has offices in Boston, London, Frankfurt, Amsterdam, Tokyo, Singapore, and Sydney. For more information, visit putnam.com.
Putnam mutual funds are distributed by Putnam Retail Management.
* Putnam's target Absolute Return Funds are not intended to outperform stocks and bonds during strong market rallies.