Mercer Nabs Pension-Risk Transfer Vet | Chief Investment Officer

Lynn Esenwine, incoming Senior Consultant, MercerMercer has hired Lynn Esenwine—a major name in US pension-risk transfers—as a lead deals and de-risking consultant.

Esenwine spent 13 years from 2002 to mid-2015 with Prudential Retirement, the leading bulk-annuity provider for North American pension-risk transfers (PRTs).

She left the New Jersey-based giant 11 months ago to lead MassMutual’s pension buyout business and product development.

At Mercer, Esenwine “will focus on facilitating large buyout transactions, coordinated with broader risk management and investment strategies,” the firm announced Friday. She is set to start as a senior consultant next month, reporting to pension-risk management group chief Richard McEvoy.

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McEvoy praised Esenwine’s insurance background as a strategic asset in advising Mercer’s pension clients on de-risking tactics. “Her knowledge and transaction experience will help Mercer enhance execution certainty for our clients,” he said in the announcement.

Mercer established its sector expertise in the UK’s more mature PRT market, while more recently building out its North American capabilities. Last July, the firm named four new annuitization experts hired from Buck Consultants, Aon Hewitt, AIG, and pension-risk advisory Dietrich & Associates.

Esenwine is “a key addition at a pivotal time for the PRT market”—a business Mercer predicted to substantially grow in coming years.

A rising tide of lawsuits against 401(k) plan sponsors—Intel, Chevron, Anthem—are pushing fiduciaries to consider outsourcing, according to Russell’s Chief Research Strategist Bob Collie.

Cases such as Tibble vs. Edison, Tussey vs. ABB, and Sulyma vs. Intel have made defined contribution (DC) no longer the “soft fiduciary option,” Collie argued.

This rising tension between plan participants and sponsors not only raise important questions about how fiduciaries should monitor 401(k) plans, but also may cause them to lean more heavily on outside experts, Collie wrote in a blog post.

“It is basic fiduciary principle that if you’re not an expert in a particular task, you should find someone who is,” he continued. “Today’s outsourcing is more explicit in its treatment of fiduciary responsibilities.”

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Pressure from both lawsuits and regulation could influence plan sponsors to hand over responsibility for the management of a service and fiduciary responsibility for that service to an outsourced-CIO.

“The series of lawsuits and regulation and the resulting changes in the fiduciary landscape are not over; some lawsuits are yet to be fully resolved (and others, presumably, are yet to appear), while the ongoing saga of the Department of Labor fiduciary rule is just one of a number of regulatory strands,” Collie wrote.

The Supreme Court issued its judgment on Tibble vs. Edison last June, confirming fiduciaries’ duty to not only select investments for 401(k) plans, but also conduct regular reviews.

This ruling is “likely to have added to fiduciaries’ uneasiness,” Collie said. “Here is one more aspect of the fiduciary’s role, which is now in a state of flux: it will take some time to lock down exactly what the required review process is expected to involve.”