401(k) Specialist Issue 1 - 2016 - 34

COLLECTIVE INVESTMENT TRUSTS
Manning and Napier
" MANNING AND NAPIER has been on the forefront of the evolution of the collective investment
trust, and we've always been driven by looking out for the best interests of plan sponsors
and participants, " says Shelby George, senior vice president of advisor services with the company.
" With that said, there are a number of benefits for collective investment trusts, including
different regulations which we saw early on as an opportunity for lower costs. "
Manning, for its part, launched its first product in 2000 and has focused since on " demystifying
CITs. "
" We're a 3(38) manager, so we take on that fiduciary role, regardless of whether it's the
execution of the portfolio or its management, " George adds. " As such, the fiduciary is tasked
with ensuring plan sponsors and participants have access to the lowest cost products available.
So it's a best practice to at least evaluate CITs. It's not that everyone should use them,
but it's certainly another tool for the plan sponsor to evaluate. "
Demystifying is an understatement, and the comprehensive
Shelby George
Senior Vice President
of Advisor Services
information the company had on the space had us a bit overwhelmed.
So in other words, investment
geeks rejoice!
" Early CITs were pools of securities, traded
manually, and typically valued only once a
quarter, " Manning and Napier helpfully begins
in one of its many educational pieces. " While
popular in defined benefit plans, CITs were
not as widely accepted in defined contribution plans due to operational constraints and a lack
of information available to plan participants. Today, there is growing concern over how 401(k)
plans are structured and the costs involved. Due to operational improvements, competitive fees,
and accessible information, we are seeing a resurgence in the popularity of CITs. "
Amen.
Putnam Investments
LIKE WE SAID, if you understand the 401(k) space and engage as
an advisor in education and enrollment, you'll be ranked highly
no matter what product you offer to plan participants. Boston-based
Putman Investments gets it.
" When it comes to CITs, plan sponsors like the pricing flexibility
for fees, daily pricing, and in general people understand the
regulatory framework and the safety they get, " says Scott Sipple,
head of global investment strategies at Putnam Investments.
" They're not subject to the '40 act, but still subject to FINRA. "
When asked what makes Putnam different to get them named
by Morningstar, Sipple stays diplomatic.
" It's all shades of gray in this business, so hopefully we're doing
it better than our competitors. We have great client relationship
people that can deliver a pricing structure that fits with the client.
Between CITs, target date funds and stable value funds, we have
the products that plan sponsors and participants are looking for. "
Jake Gilliam
Senior Multi-Asset Class
Portfolio Strategist
Charles Schwab Bank
IF YOU DON'T THINK you can use CITs
because the plan on which you advise is too
small, Jake Gilliam will set you straight.
" Plan sponsors thought they had to be
big to use CITs; not true, " Gilliam, senior
multi-asset class portfolio strategist for target
date funds with Charles Schwab Investment
Management, bluntly states. " Our CITs
have low-to-no minimums. CITs are now
accessible to all plan sponsors, and the assets
in 401(k) are generally stickier. "
He notes the inherent bias some plan
sponsors display towards target date funds in
a mutual fund format because they're familiar
with the format and " can look them up
in the paper. "
" Other plan sponsors recognize the benefits
CITs can offer. Regardless, they should
at least look to all strategies in the different
delivery formats. "
Schwab CITs, which contain roughly
$11 billion in assets, use sub-advisors to
provide institutional investment management
benefits to participants, are not
beholden to any one particular manager.
They include Schwab Managed Retirement
Trust Funds, Schwab Indexed Retirement
Trust Funds, Global Asset Allocation
and Schwab Institutional Trust Funds.
Scott Sipple
Head of Global
Investment
Strategies
34 ISSUE 1 2016 | 401kSpecialistmag.com

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401(k) Specialist Issue 1 - 2016

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