Firms Launch Collective Trusts for DC Clients

Clear Sailing Investment Group (CSIG) and Hand Benefits & Trust launched collective trust funds for Clear Sailing’s retirement plan clients.

Hand Benefits & Trust is a Benefit Plans Administrative Services Inc. (BPAS) company. The underlying investment options in the CSIG risk-based series of funds include low-cost institutional mutual funds and collective trust funds with minimum investment thresholds; alternative investments; mutual funds with trading restrictions; and certain mutual funds that may be closed to new investors.

Before November, CSIG was offering risk-based models for its defined contribution (DC) plan clients, including plans administered by BPAS and other select recordkeeping firms.     

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

Most of the same asset class managers are utilized as before the conversion, but in an institutional share class or collective fund for maximum cost efficiency. Exchange-traded funds (ETFs ) and other securities can be used within the collective funds that would not be appropriate as individual investment options within the plan.   

The companies explained that while model portfolios are attractive from a participant perspective, they involve considerable additional administrative and operational work at the level of each plan, not to mention problems caused by fund closures, investment minimums, redemption fees and other matters.

New Department of Labor (DOL) disclosure regulations have caused retirement advisers to evaluate model portfolios from the standpoint of disclosure and compliance. 

Collective trust funds allow an investment group like CSIG to advise a single series of risk-based portfolios on behalf of all retirement plan clients, across multiple recordkeeping platforms, according to David Hand, chief executive of Hand Benefits & Trust. 

“Efficient portfolio trading, lower underlying fund costs, compliance with disclosure regulations, audited financial statements and scale are features and benefits of these vehicles,” Hand said. “The team calculated historical model returns, which we incorporated into the participant communications along with detailed disclosures on the how the returns were calculated. This provides retirement plan participants with additional investment performance information.”  

Executives May Be Rethinking Retirement

Some executives dreaming of their golden years are unsure when those years will actually start, a survey found.

More than a third (38%) of chief financial officers (CFOs) said they are more uncertain about when they’re going to retire than they were five years ago, according to a survey by Robert Half Management Resources. Another 13% mentioned that their expected retirement plans have changed compared to five years ago.

Chief financial officers were asked, “How, if at all, have your retirement plans changed in the last five years?” Their responses were:

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

  • Retirement plans are unchanged: 49%
  • I am more uncertain and cannot predict when I will retire: 38%
  • I plan to spend more time working than I did five years ago: 7%
  • I plan to spend fewer years working than I had intended five years ago: 6%

Economic trends and personal demands are among the reasons many executives are re-examining their retirement plans, according to Paul McDonald, senior executive director at Robert Half.  “A growing number of professionals nearing the traditional retirement age are exploring project and part-time work so they can continue their careers, while gaining the flexibility to gradually transition into retirement,” McDonald said.

“Employers can accommodate seasoned employees who want to ease into retirement by enhancing succession planning efforts and offering consulting opportunities,” McDonald said. “This allows firms to retain legacy expertise and transfer knowledge from departing executives to future company leaders.”

The survey was developed by Robert Half Management Resources. It was conducted by an independent research firm by telephone with 1,400 CFOs from a random sample of U.S. companies with 20 or more employees.

«