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Transamerica RSU: Evolving Retirement Business Strategies

Join us at the Transamerica RSU in San Francisco to discuss the state of the defined contribution industry and share ways to increase your retirement plan business. Learn about innovative plan design, tailored services, participant education, and advisor development to enhance your retirement business strategy.

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Transamerica RSU: Evolving Retirement Business Strategies

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  1. Welcome! The Ritz-Carlton, San Francisco, California May 14-16, 2003

  2. Opening RemarksKen Cochrane, Senior Vice PresidentSales and Marketing The Ritz-Carlton, San Francisco, California May 14-16, 2003

  3. San Francisco RSUMay 2003 • RSU Background and Objective • RSU Agenda • State of the Defined Contribution Industry • Transamerica Retirement Services

  4. Background and Objective • 6th RSU • Over 260 producers have attended • 3 RSUs in 2003 • Las Vegas • San Francisco • Bachelor Gulch, CO

  5. Objective • Provide producers with an idea-sharing forum evolving around the retirement business • Provide a way for producers to become better acquainted with TRS and its management • Share ways to increase your retirement plan business

  6. Objective, continued • Provide a comprehensive understanding of TRS’ products and services, including producer programs • Gather your input to further develop and refine our offerings • Develop a strategic plan for you to increase your retirement plan business

  7. Agenda • Transamerica Retirement Services5 Pillars of Distinction: • High Quality Investments • Innovative Plan Design • Tailored Services • Participant Education Program • Advisor Services and Development

  8. Agenda - daily • Wednesday: • 5 Speakers • Ken Cochrane • Tom Schlossberg, AEGON • Toby Cromwell, Transamerica Investment Management • Chris Bonavico, Transamerica Investment Management • Peter Sullivan, RVP Eastern Region • Retirement Plans Overview

  9. Agenda - daily • Thursday • 3 Breakout Sessions: 401(k) Testing Review: David Hiss, RVP Central Region Fiduciary Issues: Peter Welsh, SVP Advanced Plan Design: Peter Sullivan, RVP Eastern Region (Innovative Plan Design) • TRS Products and Services: Stig Nybo, RVP West Region • (Tailored Services, Participant Education, Advisor Services and Development) • TRS Commitment to the Business: Kent Callahan, President • Building Your Retirement Business Strategy:Brian Lowery, Outsell • (Advisor Services and Development)

  10. Agenda - daily • Friday • Building Your Retirement Business Strategy – cont. Brian Lowery, Outsell • (Advisor Services and Development) • Departures

  11. San Francisco RSUMay 2003 • RSU Background and Objective • RSU Agenda • State of the Defined Contribution Industry • Transamerica Retirement Services

  12. The Defined Contribution Industry • Expenses • Revenues • Margins

  13. Relative Composition of Defined Contribution Operational Costs, 2002

  14. 401(k) Service Enhancements1980-2000 Online Investment Advice  On Line Transactions/ Loans  PDA Access to Plan Info   Web Access to Plan Information Self-Directed Accounts   Multi-Fund/Mutual Fund Windows  Plan Loans VRU Access to Plan Information  First 401(k) Plan  Daily Valuation  1980 1990 2000

  15. Total Expenditures per Participant, 2002(E) R2 = 0.79 100 249 331 511 527 579 663 1,157 1,578 1,894 Number of Participants, Indexed

  16. Client Service Expenditures per Participant, 2002(E) R2 = 0.07 100 249 331 511 527 579 663 1,157 1,578 1,894 Number of Participants, Indexed

  17. Participant Education Expenditures per Participant, 2002(E) R2 = 0.14 100 249 331 511 527 579 663 1,157 1,578 Number of Participants, Indexed

  18. Average Total Defined Contribution Plan Fees by Plan Size 1995 Versus 2002 Basis Points (12%) (12%) (8%)

  19. Investment Management Fees as Percentage of Total Plan Fees, 1995 Versus 2002 91% 82% 14% 8%   3% 1%

  20. Changes in Defined Contribution Assets Under Management, 1997-2002 Billions of U.S. Dollars

  21. Defined Contribution Outflows per Dollar of Inflows, 1993-2002 Rollovers and distributions are growing at a faster rate than new contributions

  22. Pretax Profit Margins, Typical Bundled Provider, End of Year 2002 3% Margin 97% Expenses

  23. Pretax Profit Margin, Typical Bundled Provider, Year-End 2000 16 10 10 7 4

  24. Conclusions: • Revenue Trends are more severe than cost issues • Providers must manage DC as a business not a distribution channel for acquiring assets (Oppenheimer, MFS, Putnam, etc.) • For most firms, revenue trends are more severe than cost issues: price pressure, changing revenue compositions and open architecture

  25. Conclusions - cont. • Revenue Solutions • Discipline in pricing and sales process • Focus on Plan Retention • Develop products and platform capabilities flexible enough to provide new avenues for growth • Strong Proprietary Fund Performance

  26. San Francisco RSUMay 2003 • RSU Background and Objective • RSU Agenda • State of the Defined Contribution Industry • Transamerica Retirement Services

  27. Transamerica Retirement Services: The Retirement Answer • 2002: • $1,018,000,000 in sales • 50% over 2001 • 2003: • 43% ahead of 2002 • Profitable in 2002 and 2003 Q1

  28. Transamerica Retirement Services: • The retirement answer!

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