PLANADVISER - November/December 2018 - 26

battle. Only 35% of actively managed
equity funds beat their indexes at the
five-year mark. "
However, as to bonds-with intermediate,
global and high-yield being
the most popular in DC plans-85%
of actively managed bonds beat their
benchmarks, Fulford said.
The reason for the discrepancy
between actively managed equity funds
and bond funds, he said, is " the bond
market is unique. It consists of a large
contingent of noneconomic players,
folks with an objective other than riskadjusted
returns. These include central
banks, which perform quantitative
easing, defined benefit [DB] pension
plans interested in hedging, and insurance
companies. They control $50 trillion
in bonds, and, with the total U.S.
bond market being $100 trillion, they
can create dislocations.
" Managing bonds passively is much
more difficult and expensive than
managing equities, " he said. " There is a
high turnover in fixed income-40%-
because bonds mature. "
PIMCO also looked at the fees
of actively managed vs. passively
managed equity and bond funds and
discovered there is a 60-basis-point
premium in equities for actively
managed funds, vs. a 30-basis-point
premium in bonds.
" Actively managed fixed income has
a lot of value to add, " Fulford said. " In
equities, there are pockets where alpha
can be found and others where there
are efficiencies and passive management
makes sense. "
Plan Committee Excellence
While all on the " Plan Committee
Excellence "
panel, moderated
by
Bruce Lanser, senior retirement plan
consultant with UBS Retirement Plan
Consulting Group, agreed that
the
retirement plan industry has evolved
substantially in the last decade, they
also agreed that, to this day, one main
reason plan sponsors turn to advisers
is for aid with governance-including
with instituting processes that help
them avoid litigation and run efficient
committee meetings. Advisers do both
by working hand in hand with the
plan's retirement plan committee, the
panelists said.
According to Robert J. Rafter, president
of RJR Consulting, there is a " terrific
opportunity out there " for advisers to
work with retirement plan committees
because, simply put, many employers
simply lack the internal expertise to
ensure the retirement plan is run in an
efficient and compliant manner.
" Doing regular training and working
with plan committees will remain a
terrific opportunity as the legislative
and regulatory picture shifts, and it is
a win-win for the adviser and client, "
Rafter said. " In my opinion, working
with plan committees to make sure
they are fulfilling their responsibilities
makes your 3(21)
fiduciary and 3(38)
Rick Fulford of PIMCO discusses " Top Trends " with Alison Cooke Mintzer of PLANADVISER.
fiduciary investment services that
much more powerful. "
Tim Irvin, consultant with Cammack
Retirement Group, concurred
with that assessment, adding,
" Getting
the right people in the room who
can consistently make the right decisions
for the plan is a challenge, but it
is so crucial.
" I don't know that there is a
individuals for
right number of
the
Conference attendees enjoy a networking moment.
committee, " he noted. " Two people is
probably not enough. It's really more
about getting good representation of the
demographics in the plan and expertise
across finance, staff roles and benefits.
A group in the mid-single-digit range is
sensible. And having an odd number of
people prevents gridlock. "
The speakers said that when new
committee members come on board,
they need fiduciary education.
26 | planadviser.com November-December 2018
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