Nationwide Terminating 300 plus PPA's

[Guest TerminatedPPA]

Just wondering if there are any terminated Nationwide PPA's which participate here. If so, would you please Email me regarding your contract termination and what has happened. We have recently been placed in this situation and I am concerned about our future. Any feedback would be appreciated.

[Guest J. David Wright]

Nationwide is changing from a network of independent third party administrators to a much smaller network of what they are calling "Franchise PPA's". "Franchise" strongly implies more centralized control, less independence or no independence, and territorial restrictions. Unlike many other vendors who work with independent third party administrators, in order to become a Nationwide PPA, you must sign a General Agency agreement with Nationwide. Like many agency or general agency agreements, the Nationwide agreement has a provision that the agreement can be terminated at will by either party with or without cause with 90 days written notice. Nationwide may have already brought this provision to your attention in a form letter. There are a series of interrelated contracts as well. If you have not reviewed the interrelationship between those contracts, I highly recommending doing so.

In a series of by invitation only meetings to discuss "Franchise PPA's" last Fall, Nationwide related these changes to their involvement with farmers who are Directors of Natiowide. So let me explain it in terms a farmer can easily understand. Consider Nationwide as the farmer and the PPA's as chickens. The farmer gather and sell the eggs the chickens lay as long as they lay and gives chicken feed in return for production to the chickens. The chickens labor day in and day out under a dark cloud, the shadow of the farmer. As the workforce [chickens] increase in age and grow tired of working from daylight to dark and production plateaus, declines, or stops entirely. As a final reward for years of faithful production which supported the farmer [and helped pay for the farm plus their Country Club membership and Mercedes payments], the farmer turns the chickens into fryers.

Nationwide is and has been using this contract provision quite literally for years. The fact is there are lot of ex Nationwide PPA's out there and the number is going to increase dramatically. The future does not look good if you are in the 80% of PPA's whose Nationwide contracts have either already been terminated or will be terminated in the near future. If you want to know more about how this is working, please email direct. Know a Nationwide Director? Forward this posting to him.

[Guest TerminatedPPA]

Your reply is what I am afraid of. The information I have obtained clearly states they will end up with around 80 right now. I have been told by Nationwide that I can't sell any more plans, but they will service the ones I have. However, I read the GA contract and it clearly states that upon termination, they will cease electronic transmissions between my firm and Nationwide. So no matter what they have said, I am sure at some point that they will "pull" the plug because they have said this is a partnership and they have shown that it clearly is not. If this happens, what will happen to my plans? I will no longer be able to service them so they will leave and transfer to another PPA. Like I said, Nationwide says they will continue to service my plans and I am sure they will, right over to one of their other PPA's

Thanks for your response and if you know of any other PPA's in the same position, let me know please.

[Guest sbewley]

We have experienced a similar problem regarding the contract issue your refer to. Our contract was terminated a month ago and apparently Nationwide has not thought this situation through. Your concern is valid and I have heard of several PPAs who are in the same position. Are you aware that Nationwide has purchased 3 or 4 PPA's which are actively competing against the other PPA's? I ran across this situation last week.

The chicken analogy is right on the money. They are apparently confused as to how they got into the position they are in. It was from the PPA's who provided their product to our clients and an insurance contract doesn't override a service agreement between the client and the TPA since the plan has the agreement with Nationwide. If they cutoff your electronics, this will put you down for the ten count. I would think that a good lawyer could fix this situation with little effort. How about a class action lawsuit? It smells like a good one to me.

[Guest TerminatedPPA]

PPA stands for Prefered Pension Administrator. PPA is what Nationwide Life calls their Third Party Administrators. Sorry for not being clear but if you are involved with Nationwide Life, you would know what a PPA was.

[R. Butler]

We have been contacting various investment companies about their TPA alliance programs. Nationwide is on our lists of companies to call. Judging from the tone of this thread you wouldn't recommend Nationwide? Also, from reading J. David Wright's and sbewley's replies Nationwide probably has some kind of quota or production target it expects TPA's to meet. A vast majority of business we would run through another program. Would Nationwide even be interested in us?

[Guest J. David Wright]

My suggestion would be call them and talk to them. It might be interesting to see what they tell you. You might even be surprised. They are seeking to retain TPA's who have the potential to attain and maintain minimum assets in the $ 500M range developed through brokers primarily. If you believe you fit their criteria, by all means call. From information I have seen, there are numerous pre requisites that did not exist before such as maintaining a person to do nothing other than work with brokers [kind of like a regional person except you are paying them]. They are likely imposing production quotas and minimum assets even though there are no production requirements in their contracts as well [unless they have been added to the new contracts] and there could be territorial restrictions. Although I have not seen a clear number for minimum assets, the number may be $ 50 M at least and could be as high as $ 100M. They are evidently not looking to sign TPA's just so they can say they have a network of X hundred TPA's since they are cutting somewhere between 50% and 80% of existing TPA's. Where they are in the process, I am not certain, but I would certainly like to know. It sounds to me what they are saying if a broker calls and says he has a client in Atlanta, GA and wants to do a plan with them for instance, their response is going to be something like, "Our TPA in Atlanta is _________ and his phone number is ______________. He will be contacting you to quote the plan and go out with you and sell it." That might not be a bad deal if your phone number is _________ and your office is in Atlanta, GA, but if you are a Nationwide PPA with office in Atlanta, GA and that is not your number????? Oh well. As they say, there are other vendors. Look at them all very closely before you commit. If there is any c contingency that could result in the inability of being able to get out with your shirt, don't sign.

[Guest DebN]

We are a PPA firm as well. We have not signed the new agreement yet, and we are hesitant to do so. We have been told if we do not sign it that we will not be able to write any new business after 90 days. We have also experienced the situation where a broker has been given another PPA firm's name and number to contact, since we do not use Nationwide exclusively. I would not put all your eggs in their basket!!

[Guest J. David Wright]

Hi, Deb. If they are sending you a new contract, I have not seen one like it. It must be the "Franchise" or maybe the "Accounstable" or whatever they are calling it now contract. I would read it carefully because for certain it will have hooks in it. Putting all of your eggs in one basket does not help either. We sold no product other than Nationwide's for eleven years and qualified for their top production group. I have a Taiwanese clock that does not run to prove it. We had so many plans moved to other PPA's [two] in the past six years, I coined a term for it. Lateral Plan Movements, and it only requires two signatures to effect. They simply line the account off your statement and write it in on someone elses statement. We have had eighteen plans make such movements in the past six years including the most recent to their latest wholly owned subsidiary PPA. Nationwide people were out calling on our broker on the case while we were at the 2000 Pinnacle meeting. We were told that the moves was initiated by the broker in every case. In addition, Nationwide co-hosted broker seminars in our market [four PPA's in the market] with one of the other three, invited every broker in this part of the state, attempted to have Nationwide exclude from the mailing list invitations to the other three area PPA's. Invitations were mailed to brokers in Nationwide's database including those we have worked with and developed relationships more than ten years. Don't believe it? Email me and I will email you a PDF copy of the seminar invitations. If that was not bad enough, the PPA Nationwide was co-hosting the seminars is an outside director in Nationwide Trust Company, FSB. Don't believe that either? Check Nationwide Insurance Company 1999 Annual Report, but you really have to look hard and know what you are looking for. Are we feeling secure yet?

[Guest TerminatedPPA]

DebN:

As Mr. Wright stated, read the agreement carefully. The original contracts clearly state that upon termination, Nationwide has the right to disconnect you electronics. What assurance does anyone have that they will not do this immediately? Some would refer to the promise by Nationwide to allow you to service the cases you have and not allow you to sell any new ones. Why would they do this? There is no reason why Nationwide should cancel a contract if they intend for the PPA to service current plans. All they have to do is not allow PPA's to sign the Trust contract and they are no longer competing with themselves. We have several instances where Nationwide's company administration firm has been contacting our brokers and plan sponsors over the last six months. If they truly intended for the terminated PPA's to continue to service their clients, they would not be sending out their company owned TPA trying to undercut admin costs and services.

We have also discovered that several PPA's have been endorsed in several areas via broker seminars. We have also discovered that several PPA's are directors in Nationwide's Trust Company. This makes it hard to compete when your competitor has direct insight into the daily operations of the company in which you work for.

Call Nationwide if you have concerns. I can assure you that they will tell you that there is nothing to worry about. If you believe their answers, please refer to your contract with Nationwide. Pay particular attention to the part, which states, "Upon termination of the contract, we will discontinue electronic communications between you, the client and Nationwide." So why would anyone believe these people. They cancel your contract because they can, what makes anyone believe they won't stop electronic communications between the PPA? Why would they unplug you? Your clients will not receive timely service; they can send one of their TPA's in and solve the client’s problems. They are now paying the override to themselves and have made sure the client is not moved to another provider. Asset retention is the name of the game.

My two cents.

[R. Butler]

Just for anyones information, I contacted Nationwide to get information about their PPA program. The regional sales person basically said they weren't looking to add new PPA's at this time. As many of the posts indicate, the individual I spoke with did confirm that Nationwide intends to cut its PPA's by more than 50%.

[Guest DebN]

Thanks for info from Mr. Wright and termed PPA. We have also been a firm like yours, David, where we have been pinnacle for many years, sold mainly their product for most of the 90s, etc. We have moved to doing daily val work in our office now and maintain our own system. We feel we have much more control over what happens with our clients! We do have that franchise new agreement and the supplement that came out after the Feb. mtg. I am reading it AGAIN. Could one of you reference the section that states "upon termination we will discontinue elec communications" etc? We are concerned as well about them buying PPA firms and using them to take business. We are also in the same boat where "our" area rep has had seminars and we have not been invited since we are considered direct write. I wonder what would happen if we did not sign and chose to not write new business? If we would eventually lose our electronic connection for existing cases? That is a very scary thought. So, is there anyone out there who has signed the new agreement?

[Guest J. David Wright]

Deb, as I said, Nationwide was talking about Franchise PPA's and some abstract name for direct writers. After whacking us, we are not in the loop so I have not seen either of the new contracts, although I would certainly like to do so. Unless Nationwide has changed their entire contractual procedure, which I doubt, the new contracts are likely amendments to the original contract.

There was an Amendment [i signed it in 1996] called Electronic Transactions Amendment which gives the GA access to electronic transactions. Find that contract amendment. Read III Article IX, TERMINATION - It states "Either party may terminate this agreement at any time by giving 90 days written notice to the other party. Access to electronic transactions may be terminated by Nationwide at any time without prior notice. Upon termination of access, Nationwide will notify GA of the termination and the reason for termination. Such termination shall in no way affect continuing obligations of GA under the terms of this agreement. Nor shall said termination relieve GA's obligation to continue to offer administrative services to any Plan". Since Nationwide says they are not processing any paper transactions and we are in a world of faster and faster horses, how long do you think you could maintain your exising accounts if your processing time decreases by 200%, 300%, 500% or more because you are without the ability to utilize electronic transactions?

Since the Electronic Transaction is an amendment to your original GA contract, if your GA contract is cancelled, this contract is cancelled as the result. From that point, it is like a gun [not to be construed as a threat of physical violence to anyone]to your head, just like the possibility of elimination of participant level accounting, which seems to be governed by subjective rules for continuation that may not even exist. If that is not bad enough, Nationwide is holding you responsible for the continued administration of the plan while eliminating access to electronic transactions. Having first hand seen the dreaded "90 day written notice by either part", I can tell you, there is NOTHING in that letter that says Nationwide does not intend to invoke the provisions of the Electronic Transaction contract. They don't even address this issue in the letter.

Nationwide has already bought three PPA firms that I am aware of. They are Pension Associates, Wausau, WI, The 401(k) Company, Austin, TX, and Nationwide Retirement Plan Services, Inc. [fka Diversified Pension Services] Cincinnati, OH. We had the first of our Nationwide plans laterally move to NRPS in January 2001. Yes, it is a scary thought. You sell too much, you don't sell enough, somebody complains, you ask too many questions, or you simply ask the wrong question. Consider the results if one day, Nationwide decided to simply "unplug" your firm. Your local Franchise PPA and/or representatives of a Nationwide owned PPA will be calling on your clients telling them how they can "plug them back in" and saving them by merely signing two forms. A new contract holder's authorized representative form appointing the new PPA and an agent of record letter appointing someone else as the agent of record and presto chango, your client account disappears from your Nationwide desktop, never to be seen again and it disapperars from your commission statement as well. How much do you think the new PPA is going to pay for you accounts? ZERO. Have you considered the impact of the value of your Nationwide accounts if you decided to sell them or to retire? What is the impact of these marketing direction changes on the value of your firm? If you were to decide to sell, who now would be potential buyers? We have already been told Nationwide is not adding any new PPA's and they are eliminating "more than 50%" of existing PPA's. Do those who remainder have any motivating reason to buy your Nationwide plans? The big winners in this tontine arrangement are those PPA's who sold more than $ 500M in assets and are being bought by Nationwide. Lets revisit this in about five years and see who is left standing.

[Guest Phil L]

I am with a PPA in the midwest that has not yet signed the new agreement. We decided a few years ago to have our own daily recordkeeping shop so that we wouldn't have be so vulnerable to any particular organziation, including Nationwide.

Even though we have added lots of plan to our own in-house daily system, we have generally produced enough Nationwide business to qualify for their Pinnacle program. Lately however, Nationwide has really given us the red headed step-child treatment for not being an exclusive Nationwide producer.

Somehow a bunch of our clients happened to get contacted from a rival PPA, one that is an exclusive Nationwide producer I believe. How on earth did they happen to get a list of our clients and their phone numbers? We are very careful about shredding documents etc. so it is unlikely that someone got our client list from inside our organization (though not impossible).

According to a very reliable source, a person we've known for more than 10 years, the local Nationwide wholesaler apparently initiated the call to action for the rival (exclusive) PPA to call the brokers and the customers on our client list. How is that for a "parnership"?

Do you think that the upper levels of management at Nationwide would be appalled if they knew what was going on? Well, guess what. In a phone call to the National Sales Manager for Nationwide, we requested that they immediately cease this practice. The National Sales Manager said he would look into it. This was quite a while ago and we haven't heard a peep from him.

I guess I don't have proof that they actually condone such practices so I will stop short of making that statement. However, apparently this issue wasn't important enough to warrant a return phone call or an apology or even a watered down explanation. No repsonse at all. And, judging by other responses in this thread, it appears that this practice might be more common than a lot of people think.

It appears to me that the Nationwide partnership might be a little bit one-sided. You can draw our own conclusions.

[Guest DebN]

Hi Phil, your firm sounds just like ours w/daily etc. We have also produced enough NW to be pinnacle, but are not getting star treatment either!! I cannot be certain that our clients have been contacted, but I do know our local rep is not contacting us.

So, if you don't sign the contract, I believe you cannot write any new business after 90 days. The BIG question is, what about your existing business? Will they cease electronic communication so you can't service those clients?

[Guest J. David Wright]

Phil, we produced exclusively for Nationwide and they did the same thing to us. We had seventeen accounts make lateral moves to one local PPA plus one to Nationwide Retirement Plan Services over the past six years.

I was led to believe the problem you described was a local problem. From what you are saying, it is not a local problem. With this re-alignment of distribution channels, I think it is going to do nothing but get far worse and quickly. I would like to know if this sort of thing is going on in other areas. You will likely be waiting a long time to hear back from the "NSM". Nationwide does not deal with hard questions or problems they create; they ignore them and hope they will go away. When they don't go away, you get axed. You want to know about no response? I can tell you about no response from these people.

"Partnership?" What partnership? You should hear their real explanation in the context I heard it! In a deposition. Your "Partnership" agreement [Contract] is terminable at will by either party with 90 days written notice and it does not require cause. Ask the wrong question? Ask too many questions? Raise too many issues or the wrong issues? Adios.

[Guest TerminatedPPA]

Phil:

Been there and done that. We have experienced similar problems and they seem to keep getting worse. We have had wholesalers solicit clients based on fiduciary liability issues and suggest that they move to the trust product that will solve their problems. After they sales pitch and the client wants to buy, the wholesaler "discovers" that the broker who sold the case can't sell the trust product because his broker dealer won't sign the selling agreement. This is an even worse situation because the broker is upset and trying to move the case while the wholesaler is pushing full ahead over to the trust company and another PPA.

This is a one-sided partnership for sure. We sell their products to our clients and brokers, service them very well and still end up getting screwed. Somewhere along the way, all of the management within Nationwide must have experienced a memory lapse which wiped out the reality portion which included the part "THESE ARE THE PPA'S CLIENTS, NOT NATIONWIDES. WE DID NOT REFER THEM, WE PROVIDE A FUNDING VEHICLE IN WHICH WE GOT PAID VERY WELL". All of these clients didn't buy the Best of America because of the Nationwide name, it was bought based on the PPA's recommendation and relationship.

Or maybe Nationwide sees a problem brewing in the distance and this is their way of trying to retain assets and profitability. Whatever it is, client lists don't just fall in the trash and end up in the "hands" of some wholesaler. We are sure our client lists have never left our office and yet we experience similar problems. I think my conclusion matches yours.

Good luck in getting a response out of the powers that be at Nationwide. Will you please post a response when someone gets back with you? If this thread is still in existence anyway. Hang in there, good luck and keep moving those plans away from Nationwide.

[Guest sbewley]

We have had similar situations like the others. Wholesalers soliciting our larger plans trying to get them to move to Nationwide Trust. Unfortunately, many of the "wirehouses" we work with have not and will not sign the trust selling agreement. This creates a problem for us since the trust product is probably a better choice for some of our clients. But if your broker can't get paid because his broker dealer will not sign the agreement, it appears that the PPA is not looking out for the client and plans best interest.

Nationwide has a simple solution to this problem, it requires 2 signatures, two forms and the plan is moved to another broker and PPA. Simple for them to do and you won't even get a thank you letter. The broker you worked with on the case probably will not continue their relationship with you either as many consider the PPA as an extension of Nationwide. Problem created and solved by Nationwide. The plan stays and the PPA gets "dumped" on. Whatever happens, we loose.

[Guest TerminatedPPA]

All of this time, we thought that we were the only ones having problems with Nationwide. I guess it is good(?) to see we are not being singled out and that others are having similar problems.

[Guest]

I have read with much interest all the postings on this topic and am very sad about what is happening to the Nationwide PPAs. I worked for NW when we first introduced the OPUS product and the whole reason NW has been so successful is because of the relationships we developed with the TPAs over the years. The OPUS product was then turned into the Best of America product and now things are changing significantly. Most of these changes are occurring now because NW has had a significant change in the management now responsible for the PPA product. I think it's a damn shame what is happening to the PPAs now.

Our firm is currently working with a NW TPA to determine their next steps. One consideration is to move the plans to your own in-house daily platform...this is not as scary as it sounds if it is done properly. Another option is to work with one of the other insurance providers out there, such as Manulife, Aetna, Hartford, Lincoln National, and Scudder Kemper.

I'd be happy to discuss some options with you if you'll send me an email. As someone who was taught that the TPA was the lifeblood of our business when I was at NW, I am ashamed at how things are being handled now. It can be very scary and frustrating, but there are some options available that may be better in the long run for you and your business.

[Guest J. David Wright]

DEAR NATIONWIDE AT URANUS.NATIONWIDE.COM AND WAUSAU INSURANCE COMPANIES AT MERCURY.NATIONWIDE.COM

You know who you are. So do I.

I hope that you enjoyed the tour of our web site this afternoon. Come and visit again when you can stay longer.

We are watching you too. And so are a lot of other people.

[Guest TerminatedPPA]

I noticed this too. Why would Nationwide be browsing my website day after day? I guess they do not have anything better to do. Big brother is watching and snooping.

[Hoard1]

I've been away from the board. My Manulife Rep suggested I look at this thread...wow.

I too was courted extensively by Nationwide to support their "partnership" program. I listened to their lies and believed a few, I must admit. I am certain that their decision is based on sound actuarial projections on attrition, goodwill and product loyallity and they found an acceptable level of risk to proceed with their franchise model.

I believe they have not factored in the following:

1. The power of the interent to connect the pension community like a diamond net of Indra.

2. Brokers reactions to their clients being contacted by selling TPA's. I for one am making this know to all my producers. Picking up new business in their wake. For they listened to the same lies I did.

They were loosing market share and were being down graded now they are degraded in the market. Centralized PPA's will be characterized by poor service, high turnover of staff and a disenfranchised client base looking for a way out. Remember BYSIS/American Funds ML/PBC and most recently SmithBarney & Blue Print, Chase & Hancock...shall I continue.

Nationwide... I hope your listening for the writing is on the wall and it is too late to take back the spoken word or the spent arrow. You may be watching but we are comming at you from so many dirrections in such numbers it will be impossible to mount a defence. You will be surprised how the market will come willingly to our aid. The market does not care who is right or wrong. The blood is in the water.

Instant Karma is out to get you. We should all do our part to help salt the ground of Columbus OH. See you at ASPA!!!!!!!!!

[Guest BAR]

I confess, I am addicted to this thread. I start each day off by checking to see if there are any updates, almost as though it is a soap opera. Does Nationwide have any idea what they have done?

[R. Butler]

I really don't have much experience with Nationwide, but from this thread and from speaking to them about the PPA program, I am not sure they care what they have done. The individual I spoke with was a regional sales manager, he talked as if the current PPA's were Albabnians and Nationwide was Milosevic. He went so far as to refer to their current policy as a "cleansing process".

One thing I have learned from this thread, be careful about relying too much on one investment product, alliance program, etc.

[Guest sbewley]

Nationwide was the fore runner in the daily valued pension field. It is a shame to see them stoop to this level. Hopefully there are a lot of plan sponsor's viewing this and they are wanting to move their plans. It is only a matter of time.

[Guest LTurner]

Nationwide is not the only provider that is having a 'shake out' in the level of services/products in the 401k arena.

I suggest you shop your plan....

Apparently, the tough markets for the past year+ have forced alot of them to reevaluate the profitability of the various centers of their business.

I have several investment providers that have told me they will no longer take any startup plans, and prefer to not work with any plan that will have less than $1 million in assets in the first year. Even take over plans with large assets are being scrutinized based on the number of participants vs.

I have plans right now with numerous providers. (I am a small independent TPA). I am continually seeing change in the market these past 6-12 months. Best advice I have is to determine what exactly you need in your plan (service, investments, insurance, loans, etc.) and start looking for alternatives.

[Guest mbutler]

I have watched this thread for weeks and decided to join because of the info. It appears that Nationwide's management are a bunch of bad guys. They apparently are out for their own interests and nothing more. I can assure you alot of plan sponsors view these pages and will take action against this company. I will refer every Nationwide plan I run across to this thread so they can view the information about the people they are dealing with. Does anyone but me feel that Nationwide's guilt is amplified by not responding to these claims? They have to know this thread exists by now. Has anyone thought of taking legal action against these people? There should be a good case here based on the information provided. What a bunch of boobs!This will be the down fall of the mighty Nationwide!!

[Guest Richard Koreto]

I've been finding this thread interesting and am considering writing an article about this situation. I would like to speak with affected individuals to get some more details. If anyone is interested, please contact me by phone or e-mail. Thanks!

[Guest Deceived]

Our TPA firm was opened in late 1997. In late 1999, our sales person was contacted by Nationwide in an attempt to get our firm to become a PPA for our area. We issued several requests from about September 1999 through February 2000 for further information on the contract. After being assured we were not getting into anything that would lead us to ruin and that the potential for income on our part was immense, we agreed to sign the PPA contract and begin working with Nationwide effective in March 2000. Within the next two months, our sales rep (who also happened to be one of the owners and a member of our board of directors) came down with a mysterious illness and was unavailable to our clients/referral sources/etc. for anything more than half days a very few days each week. This owner also began disappearing during the day to locations unknown to others within the company. Finally, in August 2000, this owner turned in a resignation and opened the doors the very next day to their own business. An office had already been established and all information on our company server (including client lists) had been downloaded from the server to this owner's personal computer. This owner was so enthusiastic and adamant about the contract between our firm and Nationwide we have surmised that the end result was due in total to that contract. Through this owner's insistence, we understood that the only person that could be listed in the contract as agent was one with an insurance license resulting in the contract being in the sales reps name (can anyone verify this for me?) In addition, our firm (and not the agent) had to be listed as the ones responsible for the payment of any expenses that may have been incurred. So what we ended up with was, bills to the company, payments to and contract in the name of the sales rep. This sales rep is now a host of the broker seminars in our area. Fortunately we haven't lost everything but it sure isn't because the sales rep didn't try to ruin us.

[Guest dubya]

Despite what seems to be blatant, unethical business practices, 2 important question are, what does your contract with Nationwide say and did Nationwide deliberately attempt to mislead anyone? On the first question, it would appear that everything that they've done, despite the unethical nature of it, has not in fact violated their contract with you. Although I'm sure that no one would now sign the same contact with Nationwide, you cannot expect the other party that you are in contract with to look out for your best interests. Thats what your attorneys are for. And if your attorney did not foresee this happening, then perhaps he/she is the one who you should be even more upset with. I'm not saying that what Nationwide did is fine or to be expected; I am saying that if their legal staff knew all along that this could happen, so should your lawyer(s).

As for the second question, some of the replys here would seem to indicate that Nationwide did in fact attempt to mislead, Deceived's post being the most recent one which seems to bear this out. Although not an attorney, I have to believe that some cases could be made due perhaps (in terms Microsoft could surely understand) as a result of their "deceptive and predatory business practices".

FYI, I am not with Nationwide and have never done any business with them. I also happen to agree with all of you that if this had happened to me, I would be hopping mad. But, my point is that worst case scenarios have to be considered before signing any contract, especially when the other signee is bigger and has more money than you. Whoever reviewed the contract and couldn't foresee this happening is the one who I think should shoulder most of the blame.

In any event, word of mouth of what they are doing is a good weapon. I can say that as a result of this thread, I will continue to avoid Nationwide in the future. I have also passed this information on to 2 other TPA firms who coincidently enough were looking to do business with Nationwide and had no idea that this issue existed.

What would be helpful is if some brave Nationwide representative joined in this thread (even anonomously) to offer another side to the story. Many of us would be interested to hear their side of the story.

[Guest Deceived]

Your points are very good. Unfortunately, the attorney we used was also a friend of the former sales rep. In our case, the sales rep, Nationwide and the attorney were all blameworthy of unethical behavior.

[Guest Kay]

I don't really have anything new to add, but had to get my 2 cents worth in about Nationwide. I have never had such horrible service from any other investment company. As a PPA, we were required to do everything. It was the most labor intensive relationship you could imagine. (on our part of course) As a new employee, I couldn't get any help from my contact at Nationwide. She never returned my calls or played childish games like leaving messages during lunch or after she knew I had left for the day. Their software was garbage. If I could get any info. from the contact, half of the time it was wrong. And she once had the nerve to tell me that the PPAs that they had terminated for poor sales didn't even get a rep! They just had to call a "pool". I had to quit my job to get away from that horrible company. I was so delighted to see this thread! Now everybody knows what I had to go through!

[Guest consultant]

I feel that most of the insurance companies are bad. Some worse than others. TPA's and consultants should do the right thing and steer their clients away from such injustice. Insurance companies have run their course by providing services that were not available in the beginning of daily valuation. Now they over charge for services that are common in today’s market. Nationwide is apparently trying to stay ahead of the curve but it appears to be to late. The market will follow the consultants and tpa's since they are the ones who provide the services the client can see. Nationwide has made a big mistake and they may or may not survive to see the outcome. When companies get greedy and think they control the universe, it always comes back to haunt them. We know the secrets of Nationwide and will be sure to share them with the financial community. Nationwide does not control they 401(k) arena although they might think they do. Did anyone notice how few plans they wrote last year? I bet it was a said day in Columbus when the management saw they wrote fewer plans than ADP! (I thought they were a payroll provider Keep up the good work you guys, the end for the great Nationwide appears to be drawing to a close. Maybe someone from Nationwide should join this thread so they can explain why they have screwed so many people if they can take the time from their PR repair. I would have to agree that the information here makes them look really bad. Everyone should send this thread to everyone they know and let them take a look at it. If you are a plan sponsor reading this, cash out and move. If you are a consultant or tpa selling this crap, shame on you. Try great west, they may be free but the won't sell you out (but they suck too). To everyone else, give up the variable annuities and go sell something, which requires a license and doesn't over charge the participants by an enormous amount. The days of 2% commission are over so you had better get used to working for your money. Peace and good riddance to the mighty Nationwide and all of the other insurance companies! Long live Executive Life, Mutual Benefit and New York Life, sorry, I meant Nationwide Life. Cheers. If the management of Nationwide would like to Email me, please feel free. I will be more than happy to explain your situation to you since you apparently do not understand good business practices or policies, but you guys are god's and you don't have to worry about it do you. Evryone keep posting their opinions since this is a public forum and there is nothing they can do about it. If they would like to try, contact O.J. Simpson, he will tell you like it is. And by the way Nationwide, your trust product really sucks as well. Nice try, but I think you could have tried harder.

[Guest consultant]

Just a refresher to put this thread back on top. Anything new going on with this situation? Nationwide is going to release earnings at the end of the month. It should be interesting!

[Guest nyc]

I have been an administrator for quite a while and have worked with Nationwide as well. I've been following this message board for quite some time, and I find it interesting that so many people are willing to jump on the bandwagon and believe allegations just because someone says they are so. Remember, that there may be some hidden agendas here...everything may not be as it seems.

Why doesn't Nationwide respond? It wouldn't matter. You would beat them up for their response - heck, you'll probably beat me up as well. Possibly there is a reason why some PPAs have been terminated? Oh, I forgot...we are all perfect and never lose clients for poor service. I know I never have!

[Guest consultant]

You are probably right NYC, don't you find it odd that their have are numerous people who have had similar problems? This is an open forum and people are free to post their opinions, questions and so forth, that is why this website exists. "everything may not be as it seems." But they may be, take a look at Nationwide's 10k filing and look at the drop in assets in the separate accounts.

"Why doesn't Nationwide respond? It wouldn't matter. You would beat them up for their response" - because they know that the decision they made was a bad one. They have put out annual reports stating PPA's are one of the top three distribution channels for their product and have failed to inform the shareholders that the management made a decision to ruin this part. They have never wanted the PPA's to communicate and know what is really going on.

"heck, you'll probably beat me up as well" - this is public forum and I for one like to hear opinions and yours is certainly welcome. I am glad to see you have never lost clients as well! Good luck with your Nationwide adventure, maybe you will be one of the luck ones and get out with your shirt!

Are you a Nationwide employee by some chance? I find it kind of odd that you would post this message if you were a PPA. Maybe Nationwide is responding and we just don't know it! As I have always said, "the ignorant always loose in the end". Have a nice day!

[Guest consultant]

I am just checking to see if there is anything new going on with Nationwide. Did anyone see the Nationwide Destination Funds press release? What a joke, just like the company! Still trying to screw everyone aren't you Nationwide!

I guess everyone will have to wait until years end to really see the how their decisions will affect the bottom line. My guess is that it will have a negative impact, but their individual annuity sales are really up which will offset the loses.

[Guest lharris]

More injustice from Nationwide. ...If your not in the "inner circle" as a PPA, you should just forget Nationwide. The most formidable PPA that Nationwide owns practically owns Nationwide. They have the RPSM's wrapped around their fingers. I couldn't beleive this but a buddy of mine lost a nice plan because the RPSM worked on the broker till they folded and sent the business to an out of state PPA! Go figure, right? Later, he finds out that Nationwide's PPA has got the guy's kid as their own wholesaler, so you know they get all of that territory's business. If your a local and your doing a great job it just doesn't matter. Their all sending the business from PPAs to the EPPA. (extremely preferred pension administrators). Why bother having the rest of us at all?

[MJ Hartman]

does anyone know what could happen now that NW has bought up Provident Mutual?? Will the provident products (selector k funds/administration servicing) fall into the state of nationwide ppa terroritory? I realize this transition will take a year or two but it would seem that there will be some fall out from this purchase somehow.

[Guest consultant]

MJ:

It sounds to me like Nationwide is absorbing the Provident Mutual business into its current structure. This may be the reason why Nationwide decided to terminate most of its PPA's. They have always wanted a true "turnkey" rather than the "hybrid" they have operated for some 10 years. No one will know for sure until this deal is done, Nationwide is not going to disclose the facts until the deal is done. The press release which Nationwide put out does say:

"In addition, Provident Mutual's 768 career financial

consultants, 1,100 independent agents, its affiliated broker-dealer 1717 Capital Management Company, and retirement savings sales force will provide Nationwide Financial with important new distribution and growth opportunities."

One would have to assume that Nationwide intends to compete directly with the brokers and PPA's for the same business by using its captive agents and employees much like Northwestern Mutual and Principal Financial. Geez, another 1,868 people selling Nationwide products and another money manager to "expand" the poor performing, over priced Nationwide family of funds. This moves also could be an attempt to regain some market share in the retirement area. Like some famous person once said "If you are down for the count and you can't steal anymore business, buy whatever is available, cheap."

What is the best way to increase your companies bottom line? You make sure your only competition is yourself.

In response to lharris - your story doesn't surprise me at all and has been going on for several years. Since the inception of Nationwide Trust Co., NFS has "included" PPA's as directors in the company which gives them the same advantages you stated and direct access to information that none of the other PPA's have.

It's like organized crime, you use all the muscle you can to squeeze, slide, steal and strong arm yourself into the position you wish to be in. Loyalty and hardwork is only appreciated while their "EPPA" is signing an agent of record letter stealing your case because of the direct endorsement from Nationwide. And don't expect a thank you for your plan card or even a christmas card after they steal your business. What can you do about it? Not much except protect what you have by moving it to a company who appreciates it.

[Guest lharris]

Yes, I sure have heard that before about certain EPPA's being officers and directors at NFS. That doesn't make a whole lot of sense for Nationwide to do because it really looks bad to the other PPA's. But then again, if your going to dump the gal anyways why be scared she'd find you in bed with all those other gals? That is about where Nationwide is heading, don't you think.

If you all haven't had your eyes opened by Nationwide's rampage s****ing of PPAs, nows a good time to consider getting out from under there wings. Anyone who wants to work against that kind of politicing is just going to be bullied into leaving. Good thing is we got this forum to learn from others mistakes and I'll tell you what, I know some brokers are getting on here and printing this stuff out to steer their people from any notion that they ought go with Nationwide. What comes around goes around!

[Guest consultant]

You are right lharris about being caught in bed. I am sure as the year progresses that Nationwide will be caught with their pants down several times.

As far as getting out from under their wing, I think they have already done this for many PPA's. Lets be real, you can't sell our junky product but we will service your existing business (at least until we steal it from you). Why would someone continue working under Nationwides agreement? How do you grow your business and generate income if you can't sell? If you have not been terminated, how do you know for sure that you will not be the next? They want ultimate control over the business owned by the PPA's and serviced by Nationwide. Maybe someday they will see their mistake which will be when they enter bankruptcy court. Nationwide is a bad company run by bad, self dealing people. They will get in bed with anyone until it no longer benefits them, then they toss you out on the street.

[Guest clayman]

Anyone out there have details on the Nationwide deal to be the exclusive PPA for Suntrust's qualified plans? One of my Suntrust clients has mentioned this coming up real soon but does not have many more details. This could be a real boost for us all if its true!

[Guest consultant]

Just wanted to see if anyone has any new news regarding Nationwide.

[Guest edemby]

I heard there was a class action lawsuit filed against Nationwide. Does anybody know about this? Who are the named plaintiffs? And does anybody know how I can get a copy of the complaint faxed or e-mailed to me?

[Guest consultant]

edemby,

You can get a copy from here http://www.ctd.uscourts.gov/

You are required to pay .07 cents a page and you can get it electronically. The total cost will be less than $4 for a copy of this complaint.

Or you can drive over to the court house and get a copy if you happen to be in the area of Hartford.

Either way, you only need the cause number, which I am sure you already have.

[Guest InterestedPerson]

I have found this particular thread quite interesting. At the outset, I am a former Nationwide employee. I do not have 'inside information' nor involved in any way in the decisions that resulted in the terminated PPA issue. My position at Nationwide did allow me to observe the various business units w/in Nationwide Financial and my comments are intended to be observations. I am not a disgruntled former employee and in no way intend this to be construed as the rantings of a former employee. My reason for leaving was primarily due to the fact that my values and future goals did not fit into Nationwide's current 'direction.' That happens and luckily we still live in a free country where opportunity abounds (a fact we all need to keep in mind these days).

In my opinion, the decision to terminate PPA's (and other decisions made by the various business units) is the result of having a share of NW Financial owned by the public. When you have to change from being 100% owned by your parent (who is a mutual company) to having to deal with quarterly earnings estimates and meeting earnings forecasts in order to please the analysts (and allegedly your shareholders), the entire dynamic changes. This is not unique to Nationwide but a fact that affects all publically held corporations. Decisions and directions that would be best for the long term give way to short term results and meeting quarterly earnings estimates.

When your pressure is to meet quarterly earnings goals and you are a manager of a business unit, you seem to have only two elements: revenue and expenses. It is difficult for a manager to control revenue. It is probably impossible for a manager to control revenue on a quarterly basis and short term is all that matters. However, a manager can control expenses. Also, expenses can be readily determined and ascertained. I strongly believe that a business really survives on the 'intangibles' like relationships and service (actually delivering service and not merely saying you do), but, these can't be measured by CPA's and thus they get short shrift and only things that can be readily measured and quantified get attention.

The service that PPA's offer to clients is not measurable or quantifiable. However, the expenses associated with maintaining a PPA can be measured and quantified. Terminating the PPAs affected by this move is a cost cutting move that can show quick results - albeit likely at the expense of longer range benefits. Public held firms don't operate on a long range basis and that is just the current reality.

The other factor that could be playing into this decision is, as other commentors have alluded, Nationwide's ability to control the 'favored' PPAs. Often cited as one of Nationwide's strengths is its distribution network. However, this is also an area easy to attack. Most of the distribution is through the broker/dealer channel and let's face it brokers (as well as some PPAs if they were honest) churn business in order to generate commissions. Other annuity issuers and brokerage firms even offer incentives for transfers of assets to their products. I would not be surprised to see a report that tied a spike in transfers to other annuities when the surrender charge of the current annuity expires. Yes there are grounds to otherwise justify a transfer (such as the fees in an old annuity being higher than in a current offering), but, let's face it, the commission incentive is the primary driving force. If Nationwide can control one of the aspects of the case, i.e., the administration of the plans using their pension contracts, it reduces the ease in which the assets can be transferred to a competitors product. Also, you can bet that the administrative overrides that the 'favored' PPAs may initially receive will be reduced as one of the next expense cutting measures. (Note: The ability to perhaps control the plan administration aspect still leaves the problem of the broker initiating the change to move the assets to a competitors product. I can only speculate that in reaction the favored PPA's will not be cooperative when it comes to transfering the plan admin. records thus adding a roadblock into the equation.)

I agree with some of the comments by those who state that the relationship with the plan sponsor is with the PPA. I am not suggesting churning of assets but perhaps there is an opportunity to align with other funding providers. As many of you probably know, Nationwide used the expense credit to cover surrender charges from other carriers when the assets were transferring to Nationwide. I imagine other carriers would be willing to utilize this same tactic to get assets from Nationwide. BUT - please do what is in the best interests of the plan participants even if it is a short term loss to you. Obviously the cost of the expense credit is picked up in contract charges. Don't expose the participants to higher charges to cover the expense credit than they may be already be incurring in the Nationwide contract (although it shouldn't be too hard to beat the pricing since Nationwide certainly isn't the cheapest). Perhaps there's an opportunity to discuss low cost funds with the plan sponsor agreeing to pay more of the administrative costs directly (by showing that the difference in a 1.3% annual charge in an annuity and a 40 basis point fund expense/management fee can be several thousands of dollars). Also, for those in the Nationwide fixed contract, don't over look the potential market value adjustment if the contract is surrendered. For you actuaries, you might want to double check the calculation and, by law, a contractholder has the right to request the formula used to calculate the adjustment. Check the fixed annuity contract for the applicable provision). Even if the plan sponsor decides to charge costs against plan assets, the equivalent basis point cost could be far lower in some cases. There is opportunity here -let's take advantage but keep in mind the best interest of the participants - please.

One personal indulgence (if the moderator doesn't object). I was with Nationwide when the new 'brand' was the big rage. I consider myself a reasonably intelligent person but I just don't get the 'frame' logo and the 'brand' strategy. Perhaps the old "N and Eagle" logo needed some updating but the 'frame' just struck me as stupid from the start. I haven't met anyone who thinks it is anything but dumb (even people who are in marketing in one sort or another basically laughed as their first reaction). I'd appreciate hearing from someone who likes the frame and the 'brand strategy' who might be able to enlighten me. I just don't get it.

While I personally believe that Nationwide's move will be harmful to them (and unfortunately many of the good people who work for Nationwide will end up suffering too), I can understand the thinking that is driving the decision. I believe that the process is simply the reality of having to focus on short term results that can be easily measured and quantified to the bottom line because of the pressures to meet Wall Street analysts expectations. Analyst's won't buy 'we are investing now and our earnings will be lower but in the long run (even a year down the road) we will be a stonger company.' You have to issue your quarterly and annual earnings estimates and if you don't meet them there will be '*&$%' to pay. Nationwide, like all publically held financial 'services' firms, have to satisfy a variety of constiuencies: brokers (who bring in the sales), analysts (who control the buy/sell recommendations affecting the share price), shareholders and those who actually have purchased one of their products. When push comes to shove, guess whose interests are likely served above those who have actually purchased their products? But, in my opinion, until the directors and/or management can be convinced that a particular decision impacts shareholder value and/or brokers won't deal with Nationwide (thus affecting their primary distribution channel), the focus will not likely change.

If you were a manager at Nationwide and your job was on the line, what would you do? I don't think the mid and low level managers like this decision and they are stuck with dealing with the fallout of these decisions. They have mortgages and educations to pay for and likely are feeling trapped and don't have an option to simply go elsewhere. The top management will walk away with their millions of dollars in severance pay so they won't have to worry about suffering financially if they mess up. Also, as long as executive comp. is tied to strict financial performance on a short term basis, I don't think there is any incentive by top management to change management philosopies. If I were in top management and my million dollar bonus was on the line, I'd be tempted to take some short cuts that would make this years financial results meet the goals so I could get my bonus. Again, not saying that I agree with the direction, however, if you put yourself in the shoes of those managers who are forced to deal with this situation and how top management is compensated, it is not surprising to see the actions that are taken.

Lastly, Nationwide is simply participating in the 'race to the bottom' with its competitors. One commentor noted Great West is pretty bad (which I agree). When your competition is Great West (and other major insurers), it's not hard to conclude that your service is in line with competitors (all bad, but service is the same).

[Bill Berke]

To add to your woes regarding what I surmise is a royal screwing from Nationwide, one of the considerations you should be aware of is how you handle a client asset transfer to or from Nationwide could easily make you a fiduciary, thereby running into ERISA which forbids you from receiving commissions or allowances. Many of you wrote describing, essentially, that the clients followed your recommendation and furthermore stated or clearly implied that your recommendation was the primary basis for the decision to select Nationwide (or its substitute). These types of comments and actions, if proved, can make you cannon fodder for the DOL.

If my surmise is correct, be aware that in most deemed fiduciary cases, the federal courts are looking at the entire relationship between the TPA and the client and, most times, determine that the TPA is a fiduciary. There are federal cases where the agent received the commission directly and he/she owned the TPA firm which did not receive any commission. The courts looked at the "package" to determine that the agent and the TPA firm were both fiduciaries. While I use the word "commission', I include expense allowances and marketing allowances, which are really commisions by another name. If you are deemed a fiduciary in a breech situation, all the commissions earned will have to be disgorged (and, in addition, you will pay the ERISA 20% 502 l penalty).

So, as you go through the trials and tribulations foisted upon you by Nationwide, remember that your conduct when presenting investments and your influence over the plan sponsor could easily result in you being deemed a fiduciary. You must always make sure the client knows that you are acting in the capacity of a commissioned salesperson when you are dealing with assets. And I suspect that, sooner rather than later, a TPA who was terminated by Nationwide will find itself named a co-fiduciary because of subsequent actions and then the agent and/or TPA firm will discover (actually the lawyer will discover) that he/she is a fiduciary. A good lawyer will name you in the suit and let you bear the burden of proving you had nothing to do with the claimed breech. As your lawyers will tell you, the discovery process most often turns up unpleasant things for someone.

My question for your lawyers to answer is who does the contractholder client belong to? If you continue to be the TPA on these clients and Nationwide doesn't provide you with the information you need to complete the 5500, its schedules and the related compliance notices, it seems to me that Nationwide could be in trouble with the DOL. But that comes back to the question of whose client is it? Our firm does not sell anything, nor do we recieve any type of commission or allowance. As a result, many insurance compnaies won't cooperate to get us the needed info timely. I have had great success notifying the insurance companies' legal departments with a letter from the client stating the I am the TPA and all appropriate records and correspondence must be timely delivered to my firm or we will hold the insurance company responsible for any penalties caused by their lack of cooperation. These companies are parties-in-interest (at a minimum) and their lawyers know the rules and which games they can play safely.

[Guest consultant]

Bill,

Point well taken and it is something all TPA's should consider. Nationwide TPA's either sold direct, through brokers or both, either situation presents a fiduciary liability issue. By direct selling or through a broker, Nationwide TPA's are being compensated by Nationwide for sells and services, either by commission payments or "overrides" which fall under the same category as revenue sharing, marketing expenses, allowances etc. are not considered commissions but are fees for service which are not disclosed to the plan sponsor or participants, although they are paying for it. Apparently Nationwide has come to the conclusion that this is a potential legal issue and have started disclosing this "fee" as a commission on their Schedule A's this year which creates the problem of disgorging profits.

Most Nationwide contract holders who purchased a plan via a broker are not aware that the TPA is being compensated via these "overrides" as well as a direct-billed admin fee. Many are not aware that Nationwide charges an accounting fee ($300 plus $4 - $16 per part.) since many TPA's choose to have this item deducted from participant accounts without the knowledge of the client or participants. All TPA's should consider whether or not the total payments by the client, including "overrides" etc. are excessive. Look at your fee schedule to determine your normal fees, and then determine your "overrides" and commission.

As for being named at least a co-fiduciary for a plan, I would have to say yes. It only takes discretion and as a Nationwide TPA, you have far more discretion than you do with other providers, which is what Nationwide wanted from the beginning. They want someone else to be liable for their actions rather than themselves. Their new “disclosure agreement” places most of this liability directly on the shoulders of the PPA and/or broker. Most PPA's have sold the product, provide investment advice, processed deferrals, loans, hardships, payouts, statements, enrollments etc. and have been paid by the client and received commission dollars, overrides etc. in some form. Something as simple as going in and manually processing an exchange for a participant gives you discretion. Since many of the Nationwide contracts are Group Variable Annuity's, they do not require a securities license therefore do not qualify as an exempt party under ERISA from fiduciary liability.

This is definitely something to think about and consider. I would strongly recommend that anyone in this situation seek legal advice from an attorney who has ERISA experience to determine if they have liability exposure

My two cents.