The Broadcast Retirement Network’s Jeffrey Snyder discusses how employers should choose guaranteed investment products for their 401k, 403b and 457b retirement plans with Frank Piccarelli of Segal Marco Advisors.
Jeffrey Snyder, Broadcast Retirement Network
Joining me now is Senior President of Segal Marco Frank Piccarelli. Frank, it’s always good to see you. Thanks for joining us this morning.
Frank Piccarelli, Segal Marco Consultants
Hey Jeff, it’s great to see you. It’s been a long time.
Jeffrey Snyder, Broadcast Retirement Network
It’s done, but you know, we stay in touch. And for the audience, full disclosure, I have known Frank Piccarelli for almost 18 years. We worked together, we stayed in touch.
He is considered one of the OGs for me, one of the great advisors in the retirement industry. And I thought he could share a lot of expertise related to sustainable value. Frank, let’s kind of get to it because, well, you’re welcome, it’s well deserved.
Stable value has been a staple of defined-share investment lineups. But in your opinion, how important is it in today’s defined world?
Frank Piccarelli, Segal Marco Consultants
Well, clearly this is an essential asset in any original lineup that you want participants to have the option of investing in to maintain principle and investment. So obviously, it plays different roles in different markets. In the government world, you know, it’s driven by the insurance industry.
And, you know, that’s the mainstay of government 457 plans. And there are different products that are out there, different way that it works in terms of disclosing fees, announcing prices at the beginning of the cycle, and so on. And then there’s the corporate world, you know, which is very much driven by the mutual fund world, you don’t see that as an option.
They use money market funds, which are more responsive to current interest rates. So it’s a different audience. Government employees are a bit more conservative by nature.
Working for the government, they follow this philosophy in terms of their investments. And in terms of asset allocation, you always need that sleeve in your overall portfolio. The upside and downside of what we see is what’s going on in the market.
Jeffrey Snyder, Broadcast Retirement Network
And, Frank, I mean, I’ve read studies where the government is 40%, and that’s a clear area of expertise for you and the Siegel company, 40% of assets specifically in these types of products in government 457 plans. Let me ask you, do you mind telling us about the different products? Because there are different structures at a very high level, right?
So are you thinking of just walking us through these structures?
Frank Piccarelli, Segal Marco Consultants
confident There are actually two main structures. The traditional structure is the insurance annuity, which we call a general account product.
It is a product backed by the general assets of the insurance company. Traditionally, it does not disclose its fees. This is a product of diffusion.
So we might earn 3% to the participants and the insurance company gets something else. It may be more than that. They basically have some limitations around portability issues.
And one important thing when evaluating these products is that you really understand the exit strategy associated with it. And then there are separate account products, which all, it was the gold rush to move more products from general accounts to separate accounts. And advisors do a lot of that to get the details of fees and have fee transparency, which, you know, of course has benefits.
And then the individual guarantee property is the plan property. Plan sponsors have a more active role in overseeing the underlying securities in these portfolios. They outsource it to an investment manager, but you really stay on top of it.
A good advisor will always manage what’s going on under the hood in a separate account and their portability features are very flexible. You can transfer securities to a successor administrator in kind. But, you know, I never see the situation.
In fact, when I go through all these searches, at the end of the day, the successful salesperson or investment manager, they want to get everything in cash. So there are pros and cons with every product. And, you know, you really understood the differences and really understood the provisions of these products.
Jeffrey Snyder, Broadcast Retirement Network
Yes, indeed. And you mentioned it, considerable interest. And this is a force field.
I know, you know, again, you’ve spent, I don’t want to spend your life, but you’ve spent a few, like me, I’ve spent a few decades, but you’ve spent a lot of time in this stable value place. This is a key part of what you do. And of course, Segal Marco, how do you do the due diligence, is it a general account product or a separate account product?
What do you need to know when you look under the hood, to use your metaphor?
Frank Piccarelli, Segal Marco Consultants
Well, you know, I worked, I started my career a few months ago with a large insurance company and I worked in the stable value area. So I had a very good understanding of the basic contract, the terms of the contract, the actual aspect of the product. And doing vendor search projects over the years and working with her, it’s a completely different evolution of seeing products.
I am very fortunate that I work for an organization that has great bench strength in looking at under-the-hood investments. So when they look at stable value, they look at the portfolio structure, the fund manager, the credit quality of the underlying securities. So they can really price and differentiate one investment policy from another.
It’s like looking at a bond fund, right? And looking for all possible bond managers. Then in defined contribution plans, especially in the government space, you need someone to close that separate account and look at the envelope provider, their financial strength, their risk-based capital to provide that guarantee.
In general accounts, it’s pretty much, you know, it’s output. So, you know, you look at it and you look at their investment policy statement that they have in place. You look at the types of securities, the principal strategy of the manager in terms of holding it, and you look at the contract provisions, looking for exit provisions.
Will you get a book deal on clearance? Will you receive an installment plan in settlement? Often, you know, customers, they are there, they are looking for the best to give the participants the highest interest rate at the lowest possible fee.
This is very good. A general account may offer these features and is actually much better than a separate account product, but you must know the exit strategy. So my experience in the industry is working on RFPs and contract strategies.
I was just working on the RFP project. I spent more time with the seller on their exit strategy than actually, you know, going forward because I knew the standard parameters of their contract. So flexibility, portability is really important.
You don’t want to shut yourself down. So many customers are challenged. They want to take their service providers out to bid, but they know that they have, they’re in the general ledger, and they have this big book for market variation, and there’s a big cost associated with that in moving the plant.
I’m not saying it can’t be done, but a good consultant will look at it and basically when they go out to bid, make sure the seller community really knows what the difference is. And they all bid on a common plant, common assumptions across the board. So they all know.
So much good information, I believe it is necessary. Analysis of cash flow, number of participants, usage, all this to give to the agents so that they know about the customer, the special relationship of the customer. Separate accounts, I use a lot in large firms where we have billions of dollars in assets and you want to diversify the portfolio.
So you might build it with a general account piece that might produce a higher yield and then diversify by having separate individual bond managers from the insurance company to give you diversification. So it’s a combination. It depends on the situation, the size of the plan, but you have to see what is the right product for the customer and understand the customer’s needs and that is a key factor as a consultant when you run and evaluate it.
But I’m very fortunate to have the research ability to really look at all the dynamics that you would use to evaluate a stable value product like you would look at a mutual fund.
Jeffrey Snyder, Broadcast Retirement Network
yes. Well, yeah, Frank, I mean, it’s definitely, I think an underappreciated part. In most cases, it makes up a significant portion, or a large portion, of the assets in the retirement plan.
But I think as you enter, you can’t look too highly on these things. You obviously have to drill into the force field for you and Sigal Marco. Frank, we have to leave it there.
Always great to meet and see you, we hope to see you on the program again soon, my friend.
Frank Piccarelli, Segal Marco Consultants
Well, thanks for your time today, Jeff. It’s always good to see you. Keep up all the great things you do informing the investment community about their options and what is available to them.
This story was originally published by The Street on March 4, 2026, where it first appeared in the Retirement section. Add TheStreet as a Favorite Source by clicking here.
