PLANADVISER - May/June 2018 - 28

participation and 47% to increase savings rate, " Burgess
says. Of those making a plan design change, the vast
majority (83%) are " typically adding new investment options,
replacing an underperforming fund, or moving to an index
fund or a fund with a lower share class. "
Erin Donnelly, executive vice president and head of
DCIO at Nuveen Investments in New York City, agrees that
the fiduciary rule had been prompting sponsors to overhaul
their investment menus. " It has created opportunities
for advisers to review TDF strategies and perhaps replace
them, " she says. " In that it [has] rais[ed] the bar, it [has
been] creating new prospects for us, "
and, as proof of that, Donnelly notes
that Nuveen's DCIO sales have been
up more than 30% a year for the past
three years.
date range has ESG as the theme for investments. That
might be a good fit for a firm with a large Millennial work
force or that does sustainable work, " he says.
In addition, with Baby Boomers starting to retire in
droves, Natixis' TDFs are designed to take people through
retirement by sustaining their assets, Farrington says. " I
think there are many innovations being developed for those
two groups, and I don't find the DCIO market challenging as
long as you bring solutions suitable for them. "
Some firms find their value proposition outside of TDFs.
ICMA-RC has a stable value fund that it has offered to
The fiduciary
TDF Approaches
David Blanchett, head of retirement
research at Morningstar Investment
Management in Chicago, notes
that with all net positive flows into
retirement plans effectively going to
passive funds, " if a DCIO firm is not
going to be the low-cost provider, it is
more important than ever to position
the unique value of their investment
options beyond performance-products
that don't have great representation
on retirement plans, such as
international bond funds or TIPS
[Treasury inflation-protected securities].
DCIO providers should take the
five or 10 best ideas that consultants could use. Depth is
more important than breadth. "
Many of the investment managers tout the unique attributes
of their target-date fund products. J.P. Morgan Asset
Management has " both a fully active TDF suite and a suite
that is a mix of passive and active, " says Mike Miller, head of
retirement distribution, in Chicago. " Performance has been
strong on both, and I feel very optimistic because of these
TDF capabilities that other asset managers cannot deliver. "
Burgess, on the other hand, cites Fidelity's three options:
active, passive and hybrid TDFs. He also points to adviser and
plan sponsor choice in the breadth of multiple share classes
and a broad range of collective investment trusts (CITs).
The TDFs that Manning & Napier offer give portfolio
managers leeway to adjust the glide path in line with market
developments, says Shelby George, senior vice president of
adviser services for the firm in Rochester, New York. " We
manage a glide range rather than a glide path, " she says.
" This allows for adjustments to equity and fixed-income
exposure and sub-asset classes. For a TDF to take a proactive
approach to risk management is unique. "
Natixis Investment Managers offers a TDF series that
invests in companies sensitive to environmental, social and
governance (ESG) issues, which resonates among Millennials,
says Ed Farrington, executive vice president of retirement
strategies, in Boston. " Our sustainable future targetrule
" has created
opportunities
for advisers
to review TDF
strategies and
perhaps replace
them. "
public-sector retirement plans since
1991, notes Craig Lombardi, managing
vice president and head of DCIO at
the firm, in Washington, D.C. " Last
September, we opened it up to privatesector
plans, " he says. " In a rising rate
environment, that provides a very
interesting opportunity. The second
thing that sets us apart is that our
TDFs are open architecture, multimanaged,
using best of breed. "
Adviser Services
Besides offering investment products,
DCIO providers are often an important
resource for advisers for education
and services. " More and more advisers
are asking for help specifically with
their business, either how to develop
new client
relationships, maintain
existing client relationships or stand
out in the marketplace, " DeFeo says.
One initiative that Voya recently launched is Voya
Cares, " to raise awareness among advisers that families
with special needs are being underserved by the financial
services industry, " DeFeo says. " The special needs could be
due to a birth defect, catastrophic injuries or age-related
issues. Think of the financial hardship of dealing with this
while trying to save for retirement. We are helping advisers
provide services to [those participants] and stand out. "
Natixis has an internal group called Portfolio Research
and Consulting comprised mostly of certified financial
advisers (CFAs), Farrington says. Their job is to " help
advisers with portfolio construction from an agnostic point
of view, " he says.
Mass Mutual produces thought leadership for advisers
about topics " such as adding value to the CFOs [chief financial
officers] at the retirement plans they serve, or how to
protect data through cybersecurity, " says Aruna Hobbs,
head of institutional investments for retirement plans for
the company, in Enfield, Connecticut.
In addition, DCIO providers are using Form 5500 data
to help advisers build prospecting lists, and some offer
investment policy statement (IPS) and plan fee benchmarking
tools, notes Jessica Sclafani, director, retirement,
at Cerulli in Boston. The services that DCIO providers offer
advisers continue to expand, indicating their commitment
to enhancing these relationships. -Lee Barney
28 | planadviser.com may-june 2018
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