Business Insider: How Shadow Bankers are Already Emerging as Winners in the SVB Collapse
NEPC’s Phillip Nelson was quoted in a recent Business Insider article to discuss the collapse of Silicon Valley Bank. View the announcement on Business Insider’s site here.
The momentum already behind the secretive private credit space has gained steam as the SVB collapse pushes companies to consider alternate sources of debt and, on the other side, private credit managers seek out new targets.
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“Phill Nelson, the head of asset allocation for the influential investment consultant NEPC, said a shift in regulatory frameworks for both banks and non-bank lenders such as asset managers was unlikely ahead of the 2024 US presidential election, even as greater scrutiny of the financial system would likely come following the SVB collapse.”
Read the full article on Business Insider’s website here.
WealthManagement.com: TDFs Grow While ESG Lags in DC Plans
NEPC’s Bill Ryan and Alison Lonstein were quoted in a recent WealthManagement.com article to discuss our 2022 DC Plan Trends and Fee survey results which include the growth of TDFs and an increase in usage of OCIO. View the announcement on WealthManagement.com’s site here.
While the retail and institutional market both live in the same worlds, sometimes it seems like they are from different universes. The recently released 17th annual NEPC 2022 DC Plan Trends & Fees Survey, while not shocking, provides insights into what is really happening with larger DC plans, which may portend changes in the retail DC market.
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“There were some myth busters in the NEPC Survey and some confirmations including:
- TDFs continue to gain traction now at 46% of plan assets garnering 70% of new contributions. Bill Ryan, NEPC’s head of DC solutions, predicts that most assets will be in target dates in three to five years.
- Participants hold an average of 2.5 funds because of the proliferation of TDFs with 66% active. Lineups are being streamlined according to Allison Lonstein, principal at NEPC, who is surprised that indexing has not grown more in some sectors like large cap value.
- Though there was a 94% increase in usage of OCIO, just 10% of clients leverage it overseeing 9% of assets. Lonstein anticipates growth with 25% of prospects interested. Ironically, Ryan sees this is a trend moving up market.”
Read the full article on WealthManagement.com’s website here.
InvestmentNews: Income Solutions Remain Sticking Point for Retirement Plan Sponsors, Survey Shows
NEPC’s Alison Lonstein was quoted in a recent InvestmentNews article to discuss our 2022 DC Plan Trends and Fee survey results which show a lack of industry consensus on how to create meaningful retirement income solutions in companies’ defined-contribution plans. View the announcement on InvestmentNews’ site here.
The booming retirement income market seems to be befuddling defined-contribution plan sponsors.
According the recently released NEPC Defined Contribution Plan Trends and Fee Survey, there’s almost no industry consensus on how to create meaningful retirement income solutions in employer plans even as the market for those solutions has skyrocketed. In fact, the report revealed that choosing a retirement income solution has proven to be a major pain point for many defined-contribution clients.
The investment consultant and OCIO provider’s data showed that 84% of plan sponsors who responded to the survey currently offer their participants a retirement income solution, generally in the form of a target-date fund that includes the flexibility to take installment withdrawals in retirement. Currently, an overwhelming 96% of respondents offer TDFs, which is unchanged from 2020, with 46% of total plan assets invested in TDFs, up from 42% in 2020, according to the study.
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“As participants continue to demand retirement income solutions, plan sponsors are seeking trusted stewards to help them simplify what’s become a pretty complex evaluation and selection process,” Alison Lonstein, principal and senior consultant on NEPC’s defined contribution team, said in a statement.
Lonstein added that this trend mirrors the action in other segments of the retirement space, especially in the ESG and legal environments, where she’s seen a “significant uptick in clients asking for fiduciary training on the ESG landscape and requests for more insight and intel around legal news.”
Read the full article on InvestmentNews’ website here.
NAPA: Retirement Income Selection Remains a 'Pain Point' for Many DC Plans
NEPC’s Bill Ryan and Alison Lonstein were quoted in a recent article from the National Association of Plan Advisors to discuss our 2022 DC Plan Trends and Fee survey results. View the announcement on NAPA’s site here.
While the dedicated retirement income solution market has proliferated over the past several years, many plan sponsors have struggled to evaluate their options strategically, according to NEPC’s 17th annual Defined Contribution (DC) Plan Trends and Fee Survey.
This year’s data reveals that retirement income solutions are more prevalent than what is typically discussed, with 84% of respondents currently offering their participants one — most often in the form of a target date fund (TDF) that includes the flexibility to take installment withdrawals as a source of income in retirement.
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“As participants continue to demand retirement income solutions, plan sponsors are seeking trusted stewards to help them simplify what’s become a pretty complex evaluation and selection process,” notes Alison Lonstein, Principal and Senior Consultant on NEPC’s Defined Contribution team.
“This trend mirrors what we’ve seen in other segments of the retirement space — especially the increasingly complex ESG and legal environments. We’ve seen a significant uptick in clients asking for fiduciary training on the ESG landscape and requests for more insight and intel around legal news,” she adds.
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“Off-the-shelf and custom TDFs can have wide-ranging risk allocations, expenses, and best practices for management and reporting — something recent regulation and court cases are looking to address,” observes Bill Ryan, Partner and Head of Defined Contribution Solutions. “As we’re likely to see continued focus on America’s retirement crisis in the years ahead, plan sponsors should be having hard conversations today about their fiduciary decision making and monitoring process for TDFs on their menu,” he adds.
Read the full article on NAPA’s website here.
PlanSponsor: Employees Should Offer Variety of Retirement Income Options, Survey Shows
NEPC’s Bill Ryan and Alison Lonstein were quoted in a recent PlanSponsor article to discuss the 2022 DC Plan Trends and Fee survey results and how the data argues that plan sponsors should offer retirement income solutions such as annuities to provide lasting lifetime income options to workers. View the announcement on PlanSponsor’s site here.
Employers offering robust retirement income options for workers is but one piece of the puzzle to help workers manage the retirement assets they have accumulated over an entire working career.
Plan sponsors need to think longer about the different lifetime income withdrawal options for defined contribution plan sponsors, new NEPC data shows.
While 84% of plan sponsor respondents currently offer retirement income solutions—most often in a target-date fund—several challenges remain for employers, including the absence of a consensus on how to develop guaranteed retirement income solutions, the NEPC 2022 DC Plan Trends and Fees Survey found.
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“Nine out of 10 of our [plan sponsor] clients [offer] a target-date fund with systematic distributions, so 90% of our clients have a retirement income solution, [but] there’s a discrepancy between when people think about retirement income and lifetime income,” he says. “We think five years from now, you may see target-date funds plus an annuity window as probably the more common way to address this problem.”
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Because there are fewer private-sector pensions available for workers to retire on, many lack a secure stream of income in retirement and need to develop—through a guaranteed insurance product, such as an annuity, or via non-guaranteed income like 401(k) IRAs and stocks—a secure stream of income for retirement. Plan sponsors need to heed this, to support their employees’ retirement readiness, says Alison Lonstein, a principal and senior consultant at NEPC.
For plan sponsors to explore offering a lifetime income option with a guaranteed feature, a critical decision must be answered: the purpose of the workplace retirement plan.
“It could come down to one simple question: Do you believe your DC plan should be a savings or retirement plan?” she says. “There’s a lot of different paths [plan sponsors] could consider in thinking about how to build out the spending phase of their lineup.”
Read the full article on Plan Sponsor’s website here.
CNBC: More Colleges to Close Even as Top Schools Experience Application Boom
NEPC’s Kristin Reynolds was quoted in a recent CNBC article to discuss why some smaller colleges and universities might be closing their doors even amid a surge in applications. View the article on CNBC’s site here.
Citing inflationary pressures and sinking enrollment, more colleges are set to close in 2023.
Already, Presentation College in Aberdeen, South Dakota; Cazenovia College in Cazenovia, New York; Holy Names University in Oakland, California; and Living Arts College in Raleigh, North Carolina, announced they will shut down after the current academic year.
The consequences of fewer students and less tuition revenue since the start of the pandemic have been severe, according to Kristin Reynolds, a partner and leader of NEPC’s Endowments and Foundations practice.
“Larger institutions can weather the storm,” she said.
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Pensions & Investments: Sponsors Mull New Methods to Fight Inflation
NEPC’s Bill Ryan was quoted in a recent Pensions & Investments article to discuss what he believes should be the primary defense against unexpected inflation for retirees. View the article on Pensions & Investments’ site here.
Pensions & Investments: SECURE 2.0 Fails to Provide All of the Help Sought by 403(b) Plans
NEPC’s Bill Ryan was quoted in a recent Pensions & Investments article expressing his disappointment that CITs failed to cross the finish line for 403(b) plans. View the article on Pensions & Investments’ site here.
Pensions & Investments: Opportunities Still Exist for CIT-Like Group Trusts in 403(b) Plans
NEPC’s Bill Ryan was quoted in a recent Pensions & Investments article to discuss 403(b) plan investment options after Congress’ failure to let executives offer collective investment trusts. View the article on Pensions & Investments’ site here.
FIN News: Greater Alts. Allocations Help Mega Endowments Rise Above Smaller Peers: Report
NEPC’s “Mega Endowment FY 2022 Returns” report was featured in a recent FIN News article to discuss our findings. View the article on FIN News’ site here.
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There was a case to be made for maintaining allocations to public equities and fixed-income securities coming out of COVID-19, which challenged the merits of diversification, according to Senior Consultant Colin Hatton.
“Higher education endowments have been reducing exposure to diversifying alternatives over the past several years. However, in 2022, we saw that the larger endowments that maintained large allocations to real assets, private equity and hedge funds were rewarded due to macroeconomic factors, mainly high-interest rates and inflation,” Hatton said, in e-mailed commentary.
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“As we look ahead, we expect that real assets and active hedge fund strategies will continue to play an important role in client portfolios, but the near-term differential between public and private market performance should narrow as we head into 2023 and beyond,” Hatton said.