Today, and over the foreseeable future, a series of events — call them global megatrends — will have a profound impact on the world economy. Each issue of Point of View will share insight into these trends and how the institutional investment community is preparing to address them.
A series of regulatory changes and economic challenges is prompting retirement plan sponsors to seek out new ways to effectively manage risk while working to meet future funding obligations. Plan sponsors are increasingly looking to outsourcing of the servicing and investment of plan assets as ways to gain simplicity in plan management while maintaining appropriate asset allocations to meet their future liabilities.
When considering potential solutions, plan sponsors likely will have to go beyond traditional methods of plan management.
The landscape for retirement plan sponsors is continually evolving, and these institutional investors will need to remain focused on several key issues:
As a result of these and other challenges, a different mindset on the part of plan sponsors is needed to manage and service these pools of assets.
Source: Northern Trust
When seeking a partner to help manage plan assets, sponsors have developed a set of key goals to ensure that a vendor can service their particular needs.
When selecting a partner to help manage plan assets, sponsors place a high value on effective investment management processes and results.
Plan sponsors who have made the outsourcing decision have a variety of requirements when selecting a partner to help manage assets or administration.
Plan sponsors perceive a common set of benefits they hope to realize when outsourcing either the investment or administrative functions.
Savings — of both cost and time — appear at the top of most plan sponsors’ lists:
Quality and ease of vendor services also represent highly desired benefits among the majority of respondents:
Note: Based on a universe of 283 survey respondents
Source: Chatham Partners