In Practice March 1, 2016

Institutional Clients Don’t Always Speak Your Sales Language

A new report from Market Strategies International finds asset managers and investment service providers may be overestimating client understanding of many of the buzz-word concepts taken for granted in the industry.
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Dozens of asset managers and consulting firms are courting institutional investors with solutions-based approaches, yet relatively few are successfully achieving meaningful recognition for their liability-driven investing (LDI) or outsourced chief investment officer (OCIO) capabilities, according to Market Strategies International’s latest addition to the Cogent Report series.

In its new U.S. Institutional Investor Brandscape report, the business research and strategy firm suggests one-third (34%) of institutional investors are “unable to name an LDI provider they would seriously consider using,” while 59% cannot name a single OCIO provider.

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Linda York, senior vice president at Market Strategies and author of the report, makes the case that this understanding barrier is clearly holding back the LDI and OCIO concepts from taking deeper root—in the defined contribution plan market especially. LDI is already “a clear favorite among corporate pensions managing to a very specific and defined liability stream,” she notes, “and many in the industry are forecasting continued interest in OCIO or fiduciary management services.”

That said, there is some serious educational work left to do among many institutional investors to ensure lasting growing in LDI or OCIO business lines, whether serving DC plans, endowments, foundations or other large-scale asset owners.

“When we prompted institutional investors with a list of 30 LDI providers, 21% of respondents who said they were interested in or currently employing LDI did not recognize any of the firms as offering LDI services,” York explains. “Moreover, when prompted with a list of 39 OCIO providers, 11% of those interested in or currently employing OCIO services did not recognize any of the firms as providers of OCIO services.”

NEXT: Time to step up the marketing game? 

York explains that, “while many firms are adding to staff and building expertise in these solutions-focused areas, few firms have yet to establish themselves as serious contenders/leaders for these services.” She believes the he next step for these firms “needs to be a concerted marketing and communication effort to boost awareness and attract new business.”

The study goes on to identify the firms that achieve the strongest recognition for their LDI and OCIO services, “many of which are already atop the leaderboard for their asset management capabilities and are leveraging these solutions-based offerings to deepen their reach with existing clients beyond the fulfillment of a particular investment mandate.”

Stacked up against names such as BlackRock, J.P. Morgan Asset Management, Wells Fargo, Vanguard, Goldman Sachs Asset Management, PIMCO and other familiar faces, York concludes that providers “seeking to break in to this lucrative yet increasingly competitive market face an uphill battle.” Still, given the relative lack of understanding of these emerging market segments among institutional investors, this may give smaller or independent firms the opportunity to differentiate themselves, “especially by touting their unique approaches to investment outsourcing and the associated benefits that clients can expect to reap.”

A summary of findings and more information on obtaining the full report is here. 

Data & Research March 1, 2016

Many Factors Can Set Women Back on Retirement Prep

Transamerica takes a look at 16 factors making women anxious about retirement.
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The Transamerica Center for Retirement Studies has released a report analyzing women’s retirement outlook in the U.S.—and why it is shaky for many. 

Called “Sixteen Facts About Women’s Retirement Outlook,” the new report is based on findings from the 16th Annual Transamerica Retirement Survey of American Workers. The firm says its latest report is being released in recognition of International Women’s Day on March 8, “which recognizes women’s social, political and economic advancement.”

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“Women in the 21st century are better educated and enjoy career opportunities that our grandmothers’ generation could only dream about,” says Catherine Collinson, president of the Transamerica Center for Retirement Studies. “However, even in 2016, a woman’s ability to achieve a secure retirement is filled with obstacles, such as lower pay and time out of the workforce for parenting or care-giving, which can negatively affect her own long-term financial prospects.”

Following are 16 facts about women in the workforce and their retirement outlook:

1.) Only 12% of women are “very confident” in their ability to fully retire with a comfortable lifestyle.

2.) Fifty-six percent of women plan to retire after age 65 or not at all.

3.) Fifty-one percent of women plan to work at least part time after they retire.

4.) Nearly two-thirds (64%) of Baby Boomer women do not have a backup plan if forced into retirement sooner than expected.

5.) Nearly half (46%) expect their primary source of retirement income will come from their 401(k) or other savings and investments, while 29% plan to rely mostly on Social Security.

NEXT: Social Security outlook

6.) The vast majority, 81%, of women are concerned that Social Security will not be there for them when they retire.

7.) Among women who plan to take time out of the workforce to be a caregiver, 67% think it will adversely impact their ability to save for retirement.

8.) Nearly one third, 28%, of women work part-time and are less likely to have workplace retirement benefits.

9.) Sixty-two percent of women are offered a 401(k) or similar employee-funded retirement plan.

10.) Seventy-six percent of women who are offered an employee-funded plan participate in it.

11.) Women who participate in their employer’s retirement plan save an average of 7% of their salary.

12.) Fifty-three percent of women are saving for retirement outside of work in an individual retirement account (IRA), mutual fund, bank account or other vehicle.

13.) Women estimate they will need an average of $1 million to feel financially secure in retirement.

14.) Among women who have estimated their retirement savings needs, 62% say they guessed.

15.) Only 36% of women use a professional financial adviser. Among this group, 75% rely on them for retirement investment recommendations.

16.) Fifty-two percent of women say that information that is easier to understand would motivate them to learn more about retirement.

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