PLANADVISER - May/June 2020 - 36

in practice
downturns, we're even more respectful of the information
flow to them, " he says. " They're bombarded with information
[about business and patient/client matters], and they
need help managing it. Downturn or not, they have to
uphold a fiduciary process, and clients like it that we get
ahead of what they need to do. "
Casella meets with his team each morning, to decide
what communications to deliver to clients and how to make
them concise. " These daily meetings ensure clients don't get
five different emails from five different people, " he says.
Casella also asks recordkeepers to be sensitive about
the information flow. " We ask them to have more regularly
scheduled communications with their team, then come to
us so we can all be on the same page about what to communicate
to clients, " he says. " Clients get one communication
at the appropriate time that is well-thought-out by their
recordkeeper/TPA [third-party administrator] and adviser. "
Comparing the crisis caused by COVID-19 to the Great
Recession, Casella observes that, while there are some
common themes between then and now, 403(b)s have
substantially evolved. IRS 403(b) regulations were finalized
at the beginning of the Great Recession. " Now, we are also
introducing better plan designs, investment menu redesigns
and target-date funds [TDFs] to them. We are offering more
participant-oriented materials. "
Having clients tell him their experiences can give him
ideas to pass along. For instance, a committee member will
describe how assets are being managed in its plan, or another
will relay actions taken that affect participants. Perhaps
an especially timely example: A client that eliminated its
match during the Great Recession now says it believes this
was a mistake. " They said it was a big black eye on the organization, "
Casella says. " A decision of this kind is more of
a concern now that participant retirement outcomes are a
focus. " " It's important for advisers to have stories to share. "
DB Plans
RODGER METZGER, Hooker & Holcombe
Investment Advisors, Bloomfield,
Following a market downturn, the biggest
challenge for defined benefit (DB) plan sponsors is the
direct effect it will have on their balance sheet and on
contributions that need to be made to their DB plans, says
Rodger Metzger, president and chief investment officer
(CIO) of Hooker & Holcombe Investment Advisors. Hooker &
Holcombe is a registered investment adviser (RIA) affiliated
with Pensionmark and has about 30 DB plan clients.
Metzger says sponsors of smaller DB plans tend to
be more focused on their business and less investmentoriented.
Many DB plan sponsors have frozen plans, and a
high percentage would love to terminate their plan and get
out of the pension business.
" In the past five years, DB
sponsors were hoping assets
would keep going up ...
and they would be able to
terminate their plans with
minimum contributions. "
" When the market goes down, it hurts assets, and when
interest rates go down, it hurts liabilities; plan sponsors
experience the ultimate double whammy, " he says. " In the
past five years, DB sponsors were hoping assets would keep
going up and the Fed would increase rates, and they would
be able to terminate their plan with minimum contributions.
With the current financial crisis, their hopes have
gone away. Right now, they have weaker business prospects
combined with expectations of making increased DB contributions
and maintaining their plan for several more years. "
In addition, he says, unlike the Great Recession-which
felt like a " relentless move down-market " -the crisis caused
by COVID-19 was so " fast and furious " in how it developed
that clients became especially concerned: notably, small DB
plans. " We try to hand-hold individual committee members
and put things into a larger perspective. " These committee
members think more like retail investors than institutional
investors, Metzger says. " We've increased communications
just to calm anxiety. "
He offers as an example a $30 million DB plan that he
typically meets with quarterly. " In mid-March, we moved to
weekly meetings, not just to effectuate trades or for rebalancing,
but mainly to reassure the committee and make it
comfortable with where the market is going and its effect on
the plan's portfolio, " Metzger says. For that client, Metzger
and the committee also normally take a much longer view
of individual funds and separate accounts. " We look at fiveyear
periods of time because that shows how managers
work in an economic cycle, " he explains. But now, Metzger
and the committee are scrutinizing funds that were lagging,
particularly on the fixed-income side.
As a general rule, his clients' portfolios are rebalanced
quarterly to strategic targets, but in the Great Recession,
when it appeared the economy was stalled, Hooker &
Holcombe suspended its rebalancing program and relied just
on clients' well-diversified portfolios. With the pandemic,
though, the downturn was faster; there was a more responsive
fiscal policy; and the market has been moving up and
down more, in response to short-term information. For
some plans, Metzger's firm has accelerated rebalancing
while others have stayed on the quarterly schedule.
In addition to hand-holding after such an " unexpected big
deal, " Metzger makes sure meetings with clients now are face
to face. " There's something to be said about looking at someone's
face to help ease anxiety, " he says. -Rebecca Moore
36 | May-June 2020

PLANADVISER - May/June 2020

Table of Contents for the Digital Edition of PLANADVISER - May/June 2020

All That Goes Into a Practice
Compliance When It's Tough
A Case For Both
The Alternative Workplace
Damage Control in a Downturn
An Uptick in Customer Arbitration?
Client Relationship Summary
Evaluating Reg BI Compliance
PLANADVISER - May/June 2020 - Cover1
PLANADVISER - May/June 2020 - Cover2
PLANADVISER - May/June 2020 - 1
PLANADVISER - May/June 2020 - 2
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PLANADVISER - May/June 2020 - 11
PLANADVISER - May/June 2020 - 2020 PLANADVISER DCIO Survey
PLANADVISER - May/June 2020 - 13
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PLANADVISER - May/June 2020 - All That Goes Into a Practice
PLANADVISER - May/June 2020 - 21
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PLANADVISER - May/June 2020 - 23
PLANADVISER - May/June 2020 - Compliance When It's Tough
PLANADVISER - May/June 2020 - 25
PLANADVISER - May/June 2020 - 26
PLANADVISER - May/June 2020 - 27
PLANADVISER - May/June 2020 - A Case For Both
PLANADVISER - May/June 2020 - 29
PLANADVISER - May/June 2020 - The Alternative Workplace
PLANADVISER - May/June 2020 - 31
PLANADVISER - May/June 2020 - 32
PLANADVISER - May/June 2020 - 33
PLANADVISER - May/June 2020 - Damage Control in a Downturn
PLANADVISER - May/June 2020 - 35
PLANADVISER - May/June 2020 - 36
PLANADVISER - May/June 2020 - An Uptick in Customer Arbitration?
PLANADVISER - May/June 2020 - Client Relationship Summary
PLANADVISER - May/June 2020 - Evaluating Reg BI Compliance
PLANADVISER - May/June 2020 - 40
PLANADVISER - May/June 2020 - Cover3
PLANADVISER - May/June 2020 - Cover4