Investing September 10, 2018

TDFs Contribute to CIT Growth in 401(k)s

In 2017, target-date funds (TDFs) represent 41% of CIT assets in 401(k) plans, Cerulli Associates finds.

Reported by

More than one-quarter of the $5.5 trillion 401(k) market was invested in collective investment trusts (CITs) in 2017, according to Cerulli Associates.

“Increased CIT adoption has been supported by ongoing fee pressure, along with growing demand from mid-market consultants in the DC [defined contribution] market,” says Jessica Slafani, director at Cerulli. “Target-date funds have been an important driver of total 401(k) CIT asset growth. In fact, target-date CIT assets increased by nearly 85% between 2015 and 2017.”

By comparison, in the same period, target-date mutual fund assets increased 40%. Today, nine of the top 10 largest target-date managers offer a target-date strategy in a CIT. For the majority, target-date CIT assets represent more than 10% of the firm’s total CIT assets.

Get more!  Sign up for PLANSPONSOR newsletters.

In 2017, target-date funds (TDFs) represent 41% of CIT assets in 401(k) plans. In total, CIT assets increased 8% in 2017 to reach $3.1 trillion.

Cerulli says retirement specialist advisers are becoming more knowledgeable about and comfortable with CITs, and the research firm expects CITs will continue to expand their share of 401(k) plan assets, particularly among mid-sized and smaller plans. To date, CITs have primarily been used by large and mega plans, Cerulli says.

Cerulli believes that defined contribution investment only (DCIO) asset managers must offer CITs to remain competitive.

Information on how to purchase Cerulli’s report on CITs can be found here.

Products September 10, 2018

Wagner Law Group Launches Adviser Search Support Service

The adviser search consulting program consists of three stages—analysis of plan needs, the RFP process and final selection.

Reported by

The Wagner Law Group has announced the launch of a new adviser search consulting service. 

As the firm points out, the fiduciary responsibility of Employee Retirement Income Security Act (ERISA)-governed retirement plan sponsors to select, monitor and terminate the investment choices available to plan participants is enormous, and has led plan sponsors to seek assistance from outside investment advisers.

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

“Retaining an investment adviser to choose plan investments, however, does not absolve retirement plan sponsors from the fiduciary duty related to plan investments, and, in and of itself, is an action that must meet ERISA’s stringent fiduciary standards,” observes Marcia Wagner, managing director of the Wagner Law Group.

Recognizing that litigation involving claims of breach of ERISA fiduciary duty continues to grow, the firm’s adviser search consulting service is tailored to assist retirement plan sponsors with the search for and selection of appropriate investment advisers in a manner designed to ensure compliance with ERISA fiduciary obligations.

Tom Clark, ERISA attorney and partner with the firm, explains that Wagner Law Group is already at work “building a pool of qualified advisers.”

“As you can imagine, many advisers have reached out so far,” he explains. “Anyone interested will be sent a short request for information document electronically that efficiently captures information.”

“As we watch ERISA lawsuits in this realm continue to mount, we feel it is our obligation to help our clients with the crucial process of selecting a proper plan investment adviser,” Wagner adds.

The Wagner Law Group’s adviser search consulting program consists of three stages. First is the analysis of plan needs, wherein plan officials are surveyed “to identify the necessary services to be provided and the desired adviser qualities.” The universe of advisers is narrowed, the firm explains, and a request for proposal (RFP) for possible candidates is developed. Candidates may include pre-screened advisers and/or those requested by the client, according to the firm.

Next is the RFP process. According to Wagner Law Group, candidates receive the RFP electronically and are asked to provide documents such as a sample investment monitoring report. Responses are analyzed and between two and four finalists are identified.

Finally comes the adviser selection step. As the firm explains, finalists all receive an additional RFP electronically and are asked for more in-depth information and additional documents such as copies of applicable insurance policies. Appropriate finalists are asked to make an in-person presentation to the client.

The Wagner Law Group acts as a fiduciary in recommending finalists and assists in the negotiation and execution of the service agreement. Those interested in the service are encouraged to reach out to the law firm directly.

«