Putnam [profile] chief Bob Reynolds is looking for increased distribution in the defined contribution investment-only market, via the introduction of two new share classes.
The new classes -- R5 and R6 -- will allow qualified retirement plan sponsors to separate investment management fees from recordkeeping and administrative fees for their plan participants.
"In our conversations with leading consultants and advisors, there is a growing interest in solutions that allow direct payment for all or a portion of administrative expenses,” stated Ed Murphy, head of DC at Putnam.
Our sister publication, The 401kWire, interviewed Murphy about the new share classes. They will launch this summer.
Company Press Release
BOSTON, May 8, 2012 – As part of a continuing effort to provide the retirement plan marketplace with new levels of transparency and flexibility, Putnam Investments today announced that it will soon be launching two new share classes – R5 and R6 - to allow qualified retirement plan sponsors to separate investment management fees from recordkeeping and administrative fees for their plan participants. These new share classes are designed for Putnam's growing investment-only defined contribution business, and are also available to full-service recordkeeping clients.
The expected launch of the new share classes for select funds this summer will be the latest step in a series of initiatives undertaken by Putnam over the past several years to dramatically increase the level of useful, actionable information and tools for advisors, retirement plan sponsors and participants to help them gain greater insight and potentially deeper levels of engagement. Putnam has been a leader in helping the retirement marketplace better understand the specific fees associated with workplace savings plans.
We began this journey by seeking to empower consultants and advisors, plan sponsors and their participants by creating heightened levels of awareness about specific fee components related to their retirement plans,” said Edmund Murphy, Head of Defined Contribution, Putnam Investments. “In seeking to develop the strongest possible offering, the next logical progression is to provide a vehicle to act upon this information – and we expect the unbundling of fees through these new share classes to be well-received by the marketplace.”
In our conversations with leading consultants and advisors, there is a growing interest in solutions that allow direct payment for all or a portion of administrative expenses,” said Murphy. Putnam funds are currently available on all major retirement recordkeeping platforms, and the additional share classes will initially be offered on the Putnam funds that are most widely used among its Defined Contribution clients.
New Levels of Transparency for Plan Sponsors
In May 2010, Putnam announced complete fee transparency for the plan sponsors that it serves in its full-service platform, covering all fees charged: investment management; servicing (including advisory fees); and recordkeeping. Plan sponsors began to see much more than their total investment expense ratio – a development that preceded the interim final fee transparency regulations announced by the Department of Labor. The new disclosures 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. They also explicitly identify advisor payments and disclose specific dollar costs for recordkeeping and plan servicing – thereby clearly illustrating the value received by sponsors and their participants for each key component of the plan.
The firm followed up in October 2010 with new disclosures that provide participants with full access to real-time information about their total fund expense ratios, any transaction fees associated with their plan that they might possibly incur and other information that enables them to determine their own individual costs. The disclosures address all major types of costs related to Putnam-administered retirement plans, including the expense ratio associated with each investment option in the plan, converted into an actual dollar value per $1,000 invested; a list of transactions which participants might make and the transaction fee associated with each; and any fees related to services that employees might incur based on how they use their plan, such as fees for managed accounts or online advice.
‘Best in Class’
Putnam was named a ‘Best in Class’ provider among DC plans with $5-$50 million in assets in the 2011 DC Provider Survey conducted by PLANSPONSOR magazine. The annual survey captured satisfaction results among nearly 7,000 plan sponsors nationwide, rating all current major recordkeeping providers. Putnam was also recognized with 100% of clients who would recommend or highly recommend its services, one of the highest levels of client satisfaction in the industry.
Putnam Investments and Retirement
Since Robert L. Reynolds, a 30-year retirement savings industry veteran, became Putnam’s President and CEO in 2008, the company has deepened its commitment to helping America meet the retirement savings challenge and launched a series of innovations and initiatives to meet emerging customer needs. In recognition of its leadership in retirement savings, Putnam was named the inaugural recipient of the “Retirement Leader of the Year” award at the 2011 annual Mutual Fund Industry Awards.
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