PFG
#<UNK>, this is <UNK>.
Just a couple of comments.
The TRS, the total retirement suite, still is a very, very powerful tool for the Principal that can differentiate value from pure 401(k) players.
And so that, again, is a differentiator, frozen defined benefits, deferred compensation.
ESOP had a nice quarter here, so that is a nice differentiator.
The other point I'd make is, because it was this generalization of large case pricing, there are so many components that go into the pricing of a large plan.
How many payroll centers, what is the current penetration rate, relative to participant involvement, what's the customized communications package.
All of those variables go into it.
So when we lose a plan or win a plan, it's because we've done the homework behind the scenes to understand exactly what kind of resources are going to have to be deployed against that plan.
So that's why, at any given time, you could lose a plan or win a plan.
But again, we like the model that we have.
We think it resonates in the marketplace, and our retention rates would imply that those large plans appreciate it.
Hopefully that helps.
I think, as you pointed out very appropriately ---+ and frankly, it's not limited to just this industry.
It's all industries where there's constant pressure.
It's one of the advantages for being a leader in an industry, having critical mass and scale and capability, and having great partners out there.
I would not anticipate there to be any pressure coming off fee structures because of DOL.
Could it cause some additional discussion.
It should, because it's really around transparency, and making sure that people understand what they're paying and what they're getting for their money.
So again, I think on a marginal basis, I think we'll continue to have a lot of dialogue around cost and pricing.
And <UNK> wanted to make one more comment here.
Thanks, <UNK>.
Good question.
So good morning again, <UNK>, to you.
I think what it's going to cause is, at the inflection point of a job changer or retiree, they're going to call into a call center, like they always have, because that's the typical process.
And they're going to be having a conversation with a person providing education and guidance.
And they're going to disclose what the pricing is in the current plan structure, in a qualified retirement plan, and it could be a larger plan.
And there's going to be a certain price.
And there also is a ---+ always have, in the past, disclosed to them that there are other options for them to consider.
They could move that money to a rollover IRA with the Principal, or they could roll over that money to a third party.
And the names are common; you would know all of those.
And the burden that now falls on the advisor is that the participant has a very clear understanding that they're moving from one product to another.
And they have to look at it on a couple of different dimensions.
One dimension, of course, is the investment lineup.
Is it the same or is it different.
Another dimension is, what's the underlying performance of those investment options.
The third dimension is on the price.
What am I paying, and what am I getting in exchange for that.
And it doesn't have to be the same price, but there has to be a thorough understanding and an explanation on why there is a difference for the price being paid.
That action, unto itself, is going to take a longer conversation for fully vetting that opportunity.
It ties back to my earlier statements that small account balance holders could find that there are fewer advisors willing to invest the time and the energy to vet every one of those situations.
So I think there is a likelihood that 401(k) service providers could end up, almost by default, retaining maybe more of those smaller account balances after they've had that discussion with that phone counselor.
I think on the larger account balances, there are advisors that are going to be spending the time to help vet the opportunity.
And the last comment I would make is, remember that we are a significant player in the rollover business for defined contribution investment only.
Where <UNK> <UNK>'s PGI investment products not only find themselves on the platform of many 401(k) chassis, but also they find themselves on rollover IRA chassis.
And again, with strong performance and investment options that solve needs for long-term savers, I think that's a net plus.
So hopefully, that's not too long-winded of an answer, <UNK>.
Do you have a follow-up.
Yes, again ---+ and I'll have <UNK> clean this up.
We're benefited because we operate not only in Latin America, but we also operate in Asia.
And we're leveraging much of what Tim ---+ or <UNK> brings, relative to institutional asset management, to those PI countries.
I'm also encouraged by some of the recovery that's happening in some of the countries, like Brazil, where you see their equity markets in the first quarter recovering by almost 12% ---+ or up 15%, and the currency has recovered by approximately 12%.
So I think there's some signs that these emerging countries are going through the process.
They're ---+ although they still show negative GDP in some cases, there is some sign that there's new capital being infused in those countries, and things are bouncing back.
But to your specific question on net cash flows, I'll defer to <UNK> to answer that.
<UNK>, one thing that gives me a little bit of comfort about the net cash flows in emerging markets is, they are still that.
In US, some of this negative cash flow pressure comes from paying out benefits.
It's why we're in the business.
And if you look at Latin America and Asia, they just don't have the same level of payouts occurring, as it relates to generating a retirement income.
So we've got a lot of emerging markets, with a lot of upside for middle class growth, in the accumulation phase here in the next decade or so.
With that, we'll take the next question.
Thank you, <UNK>.
Yes, that's a great question.
And frankly, Mike, we're really enthusiastic about China.
You heard our earlier comments around reaching an agreement with the memorandum of understanding with China Construction Bank for now 11 years.
It's just been a terrific partner for Principal.
We were over there recently, and celebrated our 10 year anniversary.
It's important to recognize those sorts of milestones.
And as you point out, the flows and the earnings are now starting to be generated after a long incubation period.
But with that, I'll ask <UNK> to make some additional comments.
Is that helpful, Mike.
Okay.
Thank you for the call.
Thank you.
I'd just like to say thank you to everyone for joining the call today.
Our growth opportunities remain strong, and our strategies firmly in place.
We'll continue to focus on managing our capital.
We'll focus on the DOL implementation.
We'll focus on running the businesses for the benefit of our customers and our shareholders, and certainly appreciate your commitment to continue to have confidence in the Principal Financial Group ---+ or I should say the Principal.
So again, thank you for joining the call.
We'll see you on the road.
