To lure 401(k) business, Putnam Investments will upgrade its technology and expand its service offering, according to a top executive.
To lure 401(k) business, Putnam Investments will upgrade its technology and expand its service offering, according to a top executive.
“We have a major Internet initiative to work with advisers to go along with our investment in the 401(k) business,” said Robert Reynolds, president and chief executive of the Boston-based firm. “To become one of the dominant players in 401(k), you need tools that fit advisers, plan sponsors and participants.”
For instance, a section of a new website will be dedicated to employee education, he said. The firm also plans to hire a new employee within 30 days to develop the educational component. “The new hire will be putting together state-of-the-art tools for participants,” Mr. Reynolds said.
In addition, Putnam is expected by yearend to launch some new products for the 401(k) market, including funds that combine real returns with absolute-return strategies. “These funds will provide superior returns with much lower volatility, which is exactly what people need as they approach retirement,” Mr. Reynolds said. “There is a need for a whole new product set.”
The firm’s defined contribution business targets plans of $50 million or less that are sold through advisers. “Later this year we plan to go up-market,” Mr. Reynolds said. “That includes offering direct to larger plans.”
Putnam will rely on the record-keeping services of its sister company FASCore LLC, a subsidiary of Great-West Lifeco. Inc. of Greenwood Village, Colo., which is part of the Power Financial Corp. of Montreal, the parent company of Putnam.
“They have 4 million participants on [the platform] already,” Mr. Reynolds said. “We have the experience and leverage of scale. We get to take advantage of our sister company’s expertise,” Mr. Reynolds said.
To be competitive, the firm needs to focus on administration, employee education and money management, he said. “To service the larger end you need the front-end interface to serve the plan sponsor and participant, and we want an adviser website to go with that,” Mr. Reynolds said. “It’s a big part of the service.”
Putnam will continue to run an open platform, Mr. Reynolds said. “We would like Putnam funds to be competitive in that space, but that is all up to us performing,” he said.
