Pensions & Investments: Record Keepers Turning to Smaller Plans to Fuel Growth After Big 2023
NEPC’s Bill Ryan was quoted in a recent Pensions & Investments article to discuss record keeper outlook for the market. View the article on Pensions & Investments’ site here.
“Surging stock and bond markets propelled record keepers’ record performance last year, but what can the industry do for an encore?
Consultants and researchers acknowledged the markets’ impact last year boosted assets under administration, but they said record keepers will need more consistent sources of future growth.
They predict more consolidation among record keepers, more educating sponsors to adopt auto enrollment, greater emphasis on keeping participants’ assets in plans and accelerated efforts in pursuing startup and smaller DC plans.”
. . .
“The M&A game isn’t over,” said Bill Ryan, partner and defined contribution team leader at NEPC. “I wouldn’t be surprised if three of the top 15 record keepers are acquired in the next 18 months.” He didn’t offer names.
“Organic growth for participants will be modest,” he added. Among the top 15 record keepers by participants in the latest annual Pensions & Investments survey, for example, five had headcounts that were down or flat from the previous survey.
Among record keepers responding to the P&I survey, almost all had higher assets under administration in 2023, but Ryan said he believes this thin-margin business will take its toll on some providers as competition causes a continued whittling of record-keeping fees.
Click here to continue reading the full Pensions & Investments article.
Pensions & Investments: How the Presidential Election Could Impact Renewable Energy Investing
NEPC’s Larissa Davy and Matthew Ritter were quoted in a recent Pensions & Investments article to discuss how NEPC is thinking about the broader implications of the election on portfolio construction. View the article on Pensions & Investments’ site here.
“Asset managers and consultants are closely watching how the U.S. presidential election could impact renewable energy investing.
Those with a focus on the sector are trying to discern whether politics around, and specific economic incentives borne out of, the Inflation Reduction Act and its myriad tax credits for clean energy will change after the November election.”
. . .
Regardless of what happens in November, managers and consultants who focus on renewables and infrastructure broadly said they are bullish on its future.
While a Trump win would be a shift for energy sector, “infrastructure as a whole has had a lot of bipartisan support, so I would be surprised if there weren’t good opportunities in infra going forward, and it’s hard to deny that no matter who’s in power,” said Larissa Davy, senior investment director of real assets at NEPC.
Her colleague Matt Ritter, partner and head of real assets Investments at NEPC, said the potential political and regulatory risk is something the firm is taking into account in its underwriting.
“The strategies that we’re recommending and looking at we believe are viable even if there were to be political or regulatory change,” Ritter said. “That’s not to say necessarily that every asset out there is in the same position, but we’re very focused on strategies that are not reliant on those subsidies or those sorts of programs to be viable.”
Even if the IRA tax credits were rolled back under a second Trump administration or Republican Congress, there are still viable investments in the renewable space, according to Davy.
“A fund investing today in renewable power is not going to suddenly not be profitable if Trump was to win this year going forward,” she said. “Over the long term that could change, but certainly that would have to be a consistent repeal of some of these types of policy agreements, like the IRA, over a 10-year term.”
Click here to continue reading the full Pensions & Investments article.
Boston 25 News: NEPC's Sarah Samuels Discusses Her Children's Book 'Braving Our Savings'
NEPC’s Sarah Samuels spoke with Boston 25 News Anchor Vanessa Welch about her new children’s book, “Braving Our Savings”. Watch the segment below:
NEPC Hires Former PGIM Principal To Lead DC Solutions
BOSTON– April 1, 2024–(BUSINESS WIRE)– NEPC, LLC, one of the industry’s largest independent investment consulting firms, overseeing $1.6 trillion in assets under management and advisement, announced that Mikaylee O’Connor will join the firm as Principal, Head of Defined Contribution (DC) Solutions, effective April 1st, 2024. O’Connor will be responsible for leading the way NEPC’s DC practice delivers innovative and creative solutions to clients. As the retirement space continues to evolve, O’Connor, in addition to serving clients, will oversee NEPC’s DC plan trends research and data analytics, guiding strategic initiatives related to target date funds, managed accounts, retirement income solutions, and other investments that are vital to the retirement outcomes of participants. She will report directly to Bill Ryan, Partner, Defined Contribution Team Leader.
“As a team, we are focused on helping our clients navigate and leading the discussion around issues relating to retirement income,” said Bill Ryan, NEPC’s Partner, Defined Contribution Team Leader. “Mikaylee’s extensive experience and deep expertise working with a diverse client set will position NEPC to continue identifying innovative solutions that help alleviate those concerns.”
Before joining NEPC, O’Connor was a Principal, Senior Defined Contribution Strategist within PGIM DC Solutions. She provided thought leadership to clients and supported the development of forward-thinking solutions designed to improve participant outcomes. Prior to that, O’Connor spearheaded RVK’s DC practice as their Head of DC Solutions overseeing strategic direction and growth of the practice. Her unique perspective will continue elevating NEPC’s DC Solutions platform as an industry-leading consultant and trusted partner.
As a thought leader in the DC space, Mikaylee sits on the DCIIA Operating and Executive Committees and has been influential across many other industry groups, such as NAGDCA, where she is on their Legislative Committee.
“Joining NEPC’s esteemed and innovative team marks an exciting phase in my career,” said O’Connor. “We are currently undergoing a unique transition in the retirement space. I am eager to contribute to the firm’s trajectory and partner with our DC team and clients to lead the creation and delivery of world-class DC solutions.”
About NEPC, LLC
NEPC is an independent investment consultant, private wealth advisor, and OCIO provider serving over 400 retainer clients and $1.6 trillion in total assets. Combining a proprietary investment team dedicated to the long-term challenges facing investors with our unique client-centric model, NEPC builds forward-looking investment portfolios for institutional investors and ultra-high-net-worth families. To learn more about NEPC, visit nepc.com.
Pensions & Investments: Mikaylee O'Connor Joins NEPC as Head of Defined Contribution Solutions
NEPC was featured in a recent Pensions & Investments article to highlight our latest Principal hire, Mikaylee O’Connor. View the article on Pensions & Investments’ site here.
Mikaylee O’Connor has joined investment consultant NEPC as principal and head of defined contribution solutions effective April 1, succeeding partner Bill Ryan who has been promoted to defined contribution team leader, a new position.
. . .
At NEPC, “I will be delving more into marketplace solutions,” she said. “I will be more directly involved with clients.”
She identified retirement income solutions, the impact of technology on plan management and plan governance as three areas of interest. Technology, for example, can be used to “better customize solutions” and can “improve participant engagement and outcomes,” she said.
Click here to continue reading the full Pensions & Investments article.
FIN News: NEPC Hires DC Solutions Head
NEPC’s Mikaylee O’Connor was featured in a recent FIN News article highlighting her new role as Head of Defined Contribution Solutions. View the article on FIN News’ site here.
Mikaylee O’Connor has joined investment consultant NEPC as principal and head of defined contribution solutions, the firm announced.
O’Connor will lead NEPC’s defined contribution practice and also oversee its defined contribution plan trends research and data analytics, guiding strategic initiatives related to managed accounts, retirement income solutions, target date funds and other investments, according to the firm.
. . .
“As a team, we are focused on helping our clients navigate and lead the discussion around issues relating to retirement income,” [Bill] Ryan said, in a statement. “Mikaylee’s extensive experience and deep expertise working with a diverse client set will position NEPC to continue identifying innovative solutions that help alleviate those concerns.”
NEPC has $1.6 billion in assets under management and advisement, according to the firm.
PlanSponsor: Gen Z Employees Show Affinity for Increased Personalization in TDFs
NEPC’s 2023 DC Plan Trends & Fee survey results were quoted in a recent PlanSponsor article which discusses how Gen Z employees exhibit a preference for heightened personalization in Target Date Funds (TDFs), emphasizing the importance of tailored investment options for this demographic. View the article on PlanSponsor’s site here.
Young 401(k) participants were the most likely to share personal information to help tailor their retirement investments to their needs and goals, according to new Cerulli data.
. . .
“Cerulli also found that 45% of TDF managers surveyed already allow participants to transition from a TDF to a managed account at a specific threshold, such as age or account balance. A recent NEPC survey found that while 43% of plans offer managed accounts and fees have come down by about 20% to 40% over the second half of 2023, only 5% of participants use the accounts.”
Read the full article on Plan Sponsor’s website here.
Pensions & Investments: DC Plans Wrestle with Cost, Complexity and Other Concerns when Considering In-Plan Retirement Income Solutions
NEPC’s Bill Ryan was quoted in a recent Pensions & Investments article to discuss in-plan retirement solutions and how the data from our 2023 DC Plan Trends & Fee survey supports his solution. Excerpts from the article are shown below. View the article on Pensions & Investments’ site here.
Despite benefiting from regulatory and commercial advances designed to make in-plan retirement solutions more attractive, defined contribution executives continue to wrestle with concerns about cost and complexity as well as compatibility among employers and record keepers.
. . .
To consultant William Ryan, the solution to an in-plan solution is hiding in plain sight: a target date series with a systematic distribution of assets upon retirement.
Ryan is a partner and head of defined contribution plan solutions at NEPC, which recently released an annual survey on DC plan trends and fees showing that people over 65 hold 45% of their assets in target-date funds. Among that age group, 68% have retired or left their employers.
“Unfortunately, only 26% have activated systematic distributions, but 26% is wildly greater than the 4% to 5% who annuitize,” Ryan said.
. . .
The words “retirement income” or “lifetime income” are subject to different interpretations, Ryan added. To NEPC, the words retirement income simply mean “getting money out of the plan to fund a paycheck,” he said. “It doesn’t need to mean guaranteed and it probably shouldn’t mean guarantee, insured, or annuity.”
However, “lifetime income” has become a synonym for “guaranteed income” — words that are “creatively interchanged by insurance companies,” he said.
“This is why we at NEPC think the industry has communicated the success and objective of retirement income very wrong,” Ryan added. “The narrative has become hyperfocused on needing to add commercial insurance to DC plans, when most participants are entitled to government retirement insurance via Social Security, and some get employer retirement insurance via a pension plan.”
Click here to continue reading the full Pensions & Investments article.
Pensions & Investments: DOL Names New ERISA Advisory Council Members, Chair
NEPC’s Bill Ryan was mentioned by Pensions & Investments for his appointment by the Department of Labor to the ERISA Advisory Council. Excerpts from the article are shown below. View the article on Pensions & Investments’ site here.
“The Department of Labor appointed five members to its ERISA Advisory Council…”
. . .
The council’s new appointees, who will each serve three-year terms, are:
- William E. Ryan III, head of defined contribution for investment consultant, NEPC
- Anusha Rasalingam, a partner at law firm Friedman & Anspach
- Charles B. Wolf, a retired shareholder of law firm Vedder Price who teaches employee benefits law at the University of Chicago Law School
- Regina T. Jefferson, a law professor at the Catholic University of America, Columbus School of Law
- Kathleen McBride, an accredited investment fiduciary analyst, and founder and president of FiduciaryPath
Click here to continue reading the full Pensions & Investments article.
PlanSponsor: Rise in TDF Popularity Causes Core Menus to Shrink
NEPC’s 2023 DC Plan Trends & Fee survey results were featured in a recent PlanSponsor article which discusses how because target–date funds represent a large and growing share of plan assets, plan sponsors are narrowing their core investment menus. View the article on PlanSponsor’s site here.
“The rising popularity of target-date funds in defined contribution plans has led to a reduction in the number of core menu investment options, according to a new NEPC survey.
After surveying 240 DC plans, of which the average plan had $1.5 billion in assets, NEPC’s 2023 DC Plan Trends and Fee Survey revealed that 97% of plans offer TDFs and that, on average, 47% of plan assets are invested in TDFs.
As a result, the core menu is shrinking. For example, in 2010, when an average of 28% of assets were invested in TDFs, that meant 72% of assets were invested in offerings in the core menu. However, by 2023, assets in TDFs had steadily increased to reach that 47% figure, meaning only 53% of assets are now invested in the core menu, NEPC found. “
. . .
“Bill Ryan, a partner in NEPC and head of its DC team, says the industry has been telling the story that older participants are taking the most advantage of the core menu for a decade, but it may not necessarily be true anymore. As automatic enrollment has become more prevalent, Ryan says, more participants—across all ages—have invested more via target-date funds, which tend to be the default investment.
According to NEPC, close to 30% of plans have fewer than 10 core investment options, and Emma O’Brien, a principal in NEPC, predicts this trend toward streamlining will continue.
‘If you look across the different buckets where we’re breaking out the number of core options that are offered, equities compressed at a much faster rate relative to the other options that are offered, and I think that’s driven by the fact that, historically, there have been multiple flavors of active equity options within lineups,’ O’Brien says.”
. . .
“Target-date funds with systematic distribution allow us to provide a paycheck in retirement, which I call the Batman dilemma,” Ryan says. “[It’s] maybe not the hero that you want, but it’s the hero that you need right now.”
Read the full article on Plan Sponsor’s website here.