CIT Use by Retirement Plans Is Growing

Wells Fargo offers non-affiliated manager strategies for CITs, with no asset minimums.

Wells Fargo announced it has experienced a 37% increase in the number of collective investment trusts (CITs) being offered in retirement plans it recordkeeps, and a 57% increase in CIT assets, from the end of 2012 to end of 2015.

“Without question, we’ve seen more growth in the small to mid-size plan market,” Jeff Kletti, head of Investments at Wells Fargo Institutional Retirement and Trust in Minneapolis, tells PLANSPONSOR. He adds that there is still growth in the large plan space, but it is not as high since large plans have had more access to CITs all along.

Kletti attributes the growth of CITs overall to a combination of media attention and recent litigation. “I think more plans are open to exploring more options, including CITs,” he says, adding that it doesn’t mean CITs are the only way to deliver lower costs and are not necessarily right for every plan.

As for growth in Wells Fargo’s own business, Kletti says the company has provided more education to plan sponsors to make sure they understand how CITs work and know the differences between CITs and mutual funds. As a result, more plan sponsors are familiar now with CITs.

In addition, Kletti attributes the growth of CIT use in Wells Fargo’s business to the type of products it launched in 2012. Wells Fargo consolidated and restructured its legacy CIT offering, and launched its first non-affiliated manager strategies for CITs. Kletti explains that mostly asset managers offer CITs, and historically, they have had high asset minimums typically restricting the use of CITs to only the largest plans. “We wanted to bring the idea to plans that didn’t have access in past,” he says. Wells Fargo offers CITs with no minimums, allowing plans of all sizes to access these potentially lower-cost options.

“Personally, I think CIT adoption will only pick up,” Kletti concludes.