Putnam Investments is counting on its client servicing capabilities to help transform its defined contribution business into an industry leader, according to the head of that business.

"I think there is a fair amount of dissatisfaction with record keepers today," said Edmund Murphy 3rd, head of defined contribution for Putnam, a Boston mutual fund firm with $114 billion of assets under management.

Cost-cutting efforts, he said, have diminished service levels at some rivals, and that is a key area where Putnam can differentiate itself.

"I do feel there is an opportunity, particularly for a firm like Putnam that can offer great service, open architecture and competitive pricing," Murphy said.

Putnam's ratio of client service staff to retirement plans tends to be two-thirds of the industry average, Murphy said. He said the company plans to hire additional staff this year and next.

On top of that, Putnam has been making "pretty material investments" in its Web offerings, Murphy said. It plans to roll out a new site for plan sponsors and plan participants early in 2010, he said.

"We think that will help us gain traction in the marketplace," Murphy said, adding that the site would feature a "new approach to the way a participant interacts with their adviser."

Putnam has 500 corporate clients who use its bundled defined contribution products; they have close to $15 billion of combined retirement assets. The company expects to post asset growth of more than $1 billion for 2009, and it expects much more than that in 2010 and beyond, Murphy said.

Reinvigorating Putnam's retirement business is a key initiative under Bob Reynolds, who stepped in last year as the struggling company's president and chief executive. Under Reynolds, Putnam has also hired dozens of fund managers, analysts and others in an effort to improve its investment performance.

Reynolds, who started Fidelity Investments' now-formidable 401(k) business, tapped fellow Fidelity alumnus Murphy in January to run Putnam's defined contribution retirement business.

Touting a record keeping firm's service is a typical way to try to compete, but it's hard to say whether one firm's service is superior to another's because each company measures client satisfaction differently, said Doug Dannemiller, a senior analyst at the research firm Aite Group.

"It's hard to make apples-to-apples comparisons," he said.

Putnam has 500 corporate defined contribution clients. In terms of the number of clients for its bundled services, it's considered to be "in the middle of the pack at best," Dannemiller said.

Putnam was a leader in the 401(k) market in the 1980s and 1990s, but in recent years has focused more on distribution of its funds than on the administrative side of the business.

But Dannemiller said he does not see why Reynolds and the Fidelity veterans he has brought to Putnam will not be able to build a thriving 401(k) business.

"I'm not sure these guys haven't gotten smarter either," he said. "They've had an opportunity to learn from their experiences."

Meanwhile, Murphy has been building Putnam's defined contribution sales team. In March, the company hired Benjamin Lewis as managing director of defined contribution sales and relationship management.

And earlier this month, the defined contribution business added three sales executives, including Chris Doucet, a senior vice president tasked with driving sales through large broker-dealer partners.

"We're very much in investment mode in terms of hiring, ramping up and making sure we have the coverage model we need," Murphy said, adding that additional hires will be announced in the coming weeks. "Part of the breakout strategy is to have the best people on the ground telling the story."

Putnam is going after defined contribution business in three areas: providing bundled investments and record keeping; selling its mutual funds through other record keepers' platforms; and capturing rollovers from individual retirement accounts.

It plans to continue hiring in all three areas, Murphy said.

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