London
Fog sidesteps retirement giants and saves a bundle
London Fog was not wasting any time. In April 2001, the
well-known outerwear manufacturer London Fog Industries
emerged from Chapter 11. That August, LFI began a search
process that led it to jettison an array of service
providers for its defined benefit and 401(k) plans.
In their place, LFI settled on Union Bank of California
to handle just about everything for the plan sponsor's
401(k) and defined benefit plans, which held roughly $9.5
million and $6.1 million in assets, respectively, as of
year-end 2002everything, that is, except defined benefit
actuarial services and investment advice to help LFI choose
among the bank's menu of more than 1,000 proprietary and
outside fund options.
LFI corporate benefits director Jamie White stresses
that LFI's reason for conducting the search was no
reflection on the performance of its original team of plan
providers. LFI's savings and pension committees were
reconstructed during the bankruptcy, and their members
wanted to make sure the plan sponsor was getting the best
bang for its buck.
"We thought, with a bundled option, we could get some
pricing economies," says White, who joined LFI while it was
still in bankruptcy in April 2000, having been HR manager
for BF Goodrich Aerospace's components services division in
Everett, Washington. "That drove our decision to put the
plan out to bid. We were just trying to benchmark what we
had against what was out there."
Voilà! Early last April, when LFI's 150 or more active
401(k) plan participants emerged from a three-week blackout
period, the plan sponsor was looking at a 20% annual cost
savings, or about $50,000 a year. "Most of the savings was
as a result of the change in actuaries," says White. "The
annual cost savings on the DB plan actuarial costs resulted
from a move from a national service provider/actuary, to a
leading regional firm no less qualified to meet LFI's
needs," says Ward Harris, president of McHenry Consultants,
the Berkeley, California-based investment consulting firm
that assisted LFI with its search.
Union Bank of California, meanwhile, stood up against
some very stiff competition: By the time LFI had whittled
its list of potential suppliers down to two, the supplier
still standing alongside Union Bank was the prodigious
Vanguard Group.
Vanguard offered an impressive array of cutting-edge Web
technology, including the ability for participants to dial
in from their cell phones to learn their latest account
balances, but LFI had little use for such features. White
found Union Bank of California to be "highly
customer-focused"and a better fit for a plan the size of
LFI. Of the company's total workforce of 500 people, 300
are eligible for the 401(k) plan, while another 150
terminated associates also maintain 401(k) account balances
with LFI. The pension planwhich was frozen back in
1995represents 650 individuals, including about 160
retirees now receiving a benefit, and some 50 active
employees.
With all those constituencies to worry about, "They go
out of their way to make me feel like I'm their only
client," White says of UBOC. "I have one point of contact
there [vice president and client service manager Steve
Webb]." Although White also works from time to time with
UBOC's compliance folks, its education consultant, and the
people that do the nondiscrimination testing, "I like the
fact that I can just go to Steve if I need to for one
consolidated answer," she says.
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