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Shadowy marketing.

Article Excerpt
As public retirement systems, state governments and the Securities and Exchange Commission try to clean up third-party marketing arrangements at public employee pension funds, more attention should be paid to so-called shadow marketers, or alternative marketing, to crack down on the practice.

While pay-to-play and third-party sales tend to be directed to defined benefit plans, shadow marketing tends to target public defined contribution plans, especially 457 deferred compensation plans, and involves the use of non-professionals in the selling of investment products.

Nationwide Financial Services Inc., for example, pays endorsement fees to state and local government entities, including the National Association of Counties, the United States Conference of Mayors and the International Association of Fire Fighters, according to its latest 10-K report. Last year it paid them each, respectively, $7.4 million, $3 million and $814,000, according to a Nationwide statement.

In exchange for the endorsement fees, these groups and others recommend to governmental entities with deferred...

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