Insights for Advisors to Help their Retirement Plans Reach Peak Potential: Part 1

by Jason Levy, Sr. Counsel at Great Gray

All Americans deserve a financially secure retirement. We support this goal across Great Gray Group by arming retirement plan advisors with the latest insights and trends that may enhance their services and generate better retirement outcomes for plan participants.

I’ve been privileged to support these efforts – and recently returned from a whirlwind trip to give four presentations in three cities about retirement hot topics. With so much to talk about, I am sharing the highlights across two blog posts. Read on for the first.

Why Collective Investment Trusts (“CITs”) Are the Right Choice for Public Retirement Plans

At the National Association of Government Defined Contribution Administrators, Inc. (“NAGDCA”) Annual Conference, I presented with my industry colleagues – Holly Zaches from Bank of New York and Irica Solomon from MissionSquare – to governmental retirement plans about collective investment trust (“CIT”) fundamentals. Here’s what resonated:

• 457(b) retirement plans can use CITs to meaningful reduce how much governmental workers pay for retirement investment options. CITs can be 50% or 60% less expensive than corresponding mutual funds – with cost savings that come with, not at the expense of, strict regulatory oversight and investor protections.
• It is urgent for Congress to pass bipartisan legislation to provide 403(b)s with equal access to CITs. Our audience consisted of sponsors and advisors to 457(b) plans that can access CITs and to 403(b) plans that cannot. Indeed, there are 457(b) and 403(b) plans sponsored by the same governmental entity, with the same eligible participants, with the same investment lineups – yet, the 403(b) plan is required to have more expensive investment options because they cannot access CITs. It is long overdue to fix this historical anomaly and provide 403(b) plans with a level playing field.

From 3(21) to 3(38): What Changes, What Doesn’t, and Why It Matters

At the RPAG National Conference, I had the privilege to moderate a panel with top-notch retirement advisors, Sarah Keibler and Brian Hanna, about a 3(38) (aka Outsourced Chief Investment Officer (OCIO)) services.

I left this session fully persuaded that a 3(38) / OCIO service model where an expert advisor takes day-to-day responsibility for selecting and monitoring investment options in a 401(k) lineup is a model that all 401(k) plans should consider. The cost of these services is lower than ever and utilizing them can generate additional cost savings for plan participants. In addition to the rightsizing of fiduciary responsibility between the advisor and employer plan fiduciaries, these benefits create a compelling service model that can benefit advisors and retirement plans, alike.