The Principal Blog

May 1

Our Man at Milken (Day 2) – More Thoughts from “Where the World Connects”

Tuesday was another full day at the Milken Institute Global Conference. In my last post, I gave you a session-by-session recap of Monday’s events. Today, I thought I’d examine the past two days of presenters and panels with the intent of addressing the recurring questions called out in my previous post. First, how should we think about risks in the current environment? And second, when and where should we look for real growth? That second question of course implies a corollary, where will we find investment returns? Read more

May 1

Financial Professionals: What is Considered “Reasonable” Compensation?

We are often asked the following question from investment professionals and recordkeepers – “How do I demonstrate that my compensation is reasonable?” Understanding and demonstrating the “reasonableness” of your compensation has come to the forefront of what plan sponsors now expect in evaluating financial professionals and other plan service providers because of the onset of the Department of Labor’s fee disclosure regulation. And there can be little doubt that the fee disclosure regulation will continue to garner a lot of attention.

What seems to be lost in all of the publicity surrounding these new disclosure requirements is that the mandate that service provider fees be reasonable has been a condition to exemptive relief under DOL’s 408(b)(2) regulation since the enactment of ERISA. In other words, while it may now be the case now that provider compensation needs to be disclosed, it has always been the case that the amount paid needs to be reasonable.

All of this begs the question – how can I prove that the compensation I receive satisfies the “reasonableness” test? Read more

May 1

The Tablet Boom

Few business tools have gained so much popularity, so quickly, as the tablet. In fact, the use of devices like iPads, Androids, and Windows tablets among financial professionals has nearly tripled since 2010. And that number is predicted to keep rising, according to the Financial Planning magazine 2012 Tech Survey.

It’s no wonder. Tablets can help financial professionals provide better service to clients, widen their reach and deepen relationships.

Apr 30

Face-off with Magic Johnson at the Milken Institute’s Global Conference? No problem

Okay, I didn’t exactly go toe-to-toe with Earvin (Magic) Johnson on the court, but I did face-off against him at the 2013 Milken Institute Global Conference. Let me explain…

It’s spring in Los Angeles and that can only mean one thing–it’s time for the much anticipated Global Conference. That’s how the Wall Street Journal described the event today–with 3500 people attending 140 sessions spread over 4 days. There are more than 600 speakers ranging from Al Gore to Tony Blair; Rupert Murdoch to Carlos Slim and Magic Johnson to Joe Torre. And the range of topics is just as broad–public policy topics like immigration reform and tax reform; healthcare issues and AIDS improvements to the future of Africa.

This was the tenth year for The Principal at the conference, although it was my first. The range of topics, the quality of the speakers and the encouragement for spirited discussion all serve to make this an eye-opening and educational event. Talk about getting out of your comfort zone!

Apr 30

The Kenny Rogers of Pension Plans

What does Kenny Rogers have to do with pension plans? Well, nothing really. But as I sat down to write my LDI blog post, I thought about how many plan sponsors gamble with their pension plan investments.

As I mentioned in earlier posts, the behavior of the stock market has little to do with the way a defined benefit (DB) plan’s liabilities react. Yet many DB plan sponsors make big bets by allocating a large portion of their plan portfolios to stocks— without considering plan liabilities. (After all, “You’ve got to know when to hold ’em, know when to fold ’em.”) Read more

Apr 30

Our Man at Milken (Day 1) – On-the-Ground Insights from “Where the World Connects”

This week, in my capacity as a part of the strategy team for Principal Global Investors, I have the opportunity of attending the Milken Institute Global Conference in Los Angeles. The conference is a program that includes 140 sessions involving a total of 620 speakers and panelists. This year’s record attendance of over 3,000 brings together participants from 40 countries. By any measure, it’s an incredible range of experiences and disciplines. For the next couple days, I’ll be sharing a few insights from some of the presenters and panels, starting with this post about some of Monday’s sessions.

First, a general observation. Experiencing this conference brings home the fact that, at its core, investing is about people and ideas. In a forum like Milken, you really see the power of bringing senior business leaders and investment professionals together with clients and guests for three days packed with thought-provoking discussions. Read more

Apr 29

It’s All About Me, Not Me and Us

Recently I was returning to Des Moines from New York City via Minneapolis. The flight out of New York City’s Laguardia Airport was delayed and there were several passengers that were going to have very tight connections (and to compound the issue many of those connections were the last flight of the day). The flight attendant asked those passengers with Minneapolis as their final destination to let the others exit first to increase their likelihood of making their connecting flights.