PIMCO just released its 8th annual “DC Consulting Support and Trends Survey,” which included 49 firms — mostly so-called “Tier 2” consultants — representing 7,800 clients and $2.8 trillion of DC assets, with an average plan size of more than $350 million. The survey reviews the consultants’ views on custom asset allocation funds, the fastest growing areas of work, the asset classes most likely to gain, passive funds and retirement income. In many aspects of the DC marketplace, what happens in the larger DC markets eventually trickles down to smaller plans.
Highlights of the study include:
• A slight increase in the number of clients using custom target date/risk funds, with a larger increase for multi-manager balanced services.
• 98% indicated a likely decoupling of target date/risk funds from the incumbent record keeper, with 82% of consultants supporting custom solutions.
• More than 90% of firms recommended active management within asset allocation strategies, with concerns about misperceptions that index funds are litigation-safe, need less oversight and are risk-free.
• 73% act as 3(38) fiduciaries on manager selection and 66% for the glide path.
• Most clients are likely to outsource fiduciary risk; two-thirds are likely to hand over the reins on investment manager selection and monitoring.
The fastest growing areas of service last year were fee benchmarking, investment design, QDIA creation, record keeper searches and manager selection/monitoring.
