Deals and People February 2, 2023

New OCIO Head for U.S. Bancorp’s Institutional Business

The bank-owned asset manager promoted a new head for the practice to expand its market share.

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U.S. Bancorp promoted Jim Link to head of its institutional outsourced CIO practice, effective immediately, the firm announced in a press release.

Link is responsible for delivering investment advice to institutional investors, including retirement, foundation, endowment and insurance asset owners, says Eric Thole, CEO of U.S. Bancorp Asset Management in an email.

“The institutional OCIO segment has grown significantly over the past decade and is expected to continue on this trajectory in the coming years as clients seek holistic solutions over varying market cycles,” says Thole.“We were in a position to focus significant effort and resources into growing our presence in the space.”

Institutional investors use OCIO services to transfer full or partial responsibility to a third party—an asset manager or investment consultant—to operate the investment function, accountability and fiduciary responsibility for an asset pool. Increasingly, defined benefit plans have used outsourced investment advisers to improve performance and funding.

The U.S. Bancorp OCIO business is operated by a wholly owned subsidiary—PFM Asset Management LLC—responsible for new business development, investments, client experience and service or product offerings, according to a U.S. Bank spokesperson.

“The increasing complexity of portfolios, combined with extreme market volatility, has caused many institutions to rethink their approach to managing portfolios and adopt the OCIO model,” the U.S. Bancorp release stated. “Our institutional clients are looking for an OCIO partner who is able to offer sophisticated guidance and navigate these challenges in an agile and cost-effective manner that may not be possible with in-house resources.”

Link was promoted to the role because his work experiences have prepared him to grow the OCIO business, added Thole, to whom Link reports.

Link was previously head of the multi-asset strategies group and worked as chief marketing officer at PFM Asset Management. He has also held positions with Wachovia Bank, Manning & Napier and T. Rowe Price.

The 2022 CIO Outsourced-Chief Investment Officer survey found the use of OCIO services was more prevalent at smaller organizations. The research from CIO, which, like PLANSPONSOR, is owned by International Shareholder Services Inc., found 50% of OCIO clients managed investment portfolios with less than $500 million of assets.   

As of December 31, 2022, PFM Asset Management had more than $153 billion in assets under management and more than $48 billion in assets under administration, according to the spokesperson. As of 2022 year-end, the firm’s OCIO practice comprised $22.6 billion in combined assets under management and assets under administration.

Data and Research February 1, 2023

Inflation, US Workers’ Recession Fears Force Delayed Retirement

A Franklin Templeton Investments study found that although the U.S. economy has not contracted yet, workers feel elevated financial stress and anxiety.   

 

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Workers grappling with the effects of the current economic climate have re-envisioned their retirement because of increased prices and fears of a recession, according to new data from Franklin Templeton Investments.

Inflation, market volatility and historic drawdowns have forced workers to reassess their retirement plans, according to the 2023 Voice of the American Worker Survey.

The report found 73% of workers agreed that inflation directly threatens their retirement plans, and 63% said the current economic climate has affected their plans to retire early.

The research showed that employees have delayed their planned retirement age an average of three years—to age 65 from age 62—and 61% feel their retirement plans are in jeopardy, while 73% agreed with the statement, “The soaring living expenses changed the way I envisioned my retirement.”

“With the stress of a potential recession on the horizon, it’s critical for employers to check in with their employees to see how they’re feeling and offer comprehensive, personalized support,” stated Yaqub Ahmed, head of U.S. retirement, insurance and 529 plans at Franklin Templeton, in a press release.  

Data from the Bureau of Economic Analysis, an agency of the Department of Commerce, show U.S. gross domestic product increased at an annual rate of 2.9% in the fourth quarter of 2022, after increasing 3.9% in the third quarter, following two consecutive quarters with decreases, earlier in the year.

Although workers believe their plans to retire are at risk, many employees remain focused on saving for retirement, with 57% more likely to contribute to their retirement account than to stop saving altogether, the report finds.

Franklin Templeton Investments also found 64% of respondents agreed that their financial independence is in jeopardy due to the current economic situation, and 49% feel uncertain about their job stability—including a full 60% of Millennials—because of economic conditions.

With workers feeling elevated levels of financial stress, employers have an opportunity to build trust by checking in with their workforce, Ahmed added.

“Providing employees with a network of resources in times of uncertainty may help improve wellness across all dimensions—financial, physical and mental—ultimately, enhancing productivity at work,” said Ahmed.

What’s Changed in 2023

Franklin Templeton found that 52% of workers plan to pursue a phased retirement, compared to 47% in the 2022 report and 44% in 2021.

The research showed a seven-percentage point increase year-over-year—to 42% from 35%—of workers feeling highly stressed by their financial health. Franklin Templeton Investments also found a five-percentage point increase—to 74% from 69%—for workers who said achieving financial independence is their top financial concern, and a seven-percentage point  spike—to 61% from 54%–for employees who agreed that paying off debt is top of mind.

Achieving financial independence, at 81%, remained the primary goal for workers surveyed in 2022.

Employer Options

Higher expenses due to increased inflation has caused stress that likely impacts most workers, but plan sponsors still have some options.

“If employers are unable to increase employees’ pay, they should consider offering benefits and incentives that could be just as impactful,” the report stated.

Personalized benefit offerings and appropriate financial wellness tools are among the options for employers to mitigate employee financial stress, the report advised.

For 52% of workers, the most preferred benefit is increased pay, but 41% answered a boosted 401(k) match amount, and 25% preferred an investment with a guaranteed portion of retirement income.

The report was conducted by the Harris Poll LLC, on behalf of Franklin Templeton, from October 17 to October 27, 2022, among 1,000 employed U.S. adults.

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