Investment Strategies

This year proved to be more of a "long term planning" year for large financial institutions that are currently weathering the storm of the financial crisis. In the coming year, we believe that these firms will look to our team's independent asset allocation, manager selection and due diligence capabilities to enhance their products. Undoubtedly, the recent market turmoil has verified the relevance of having an independent expert assist with these services. The Investment Strategies team sees the largest growth opportunities for 2010 in two main areas – plan sponsor investment consulting/fiduciary partnership services and our retirement income solution.

We have also seen many defined contribution providers in the small retirement plan market making an effort to enhance their product offerings in order to stay competitive, while also working in synch with their distribution structure. These products are primarily distributed in the financial intermediary space, so our team has implemented a flexible, "advisor friendly" program that can help to make their plan sponsors' duties more manageable with respect to investment option selection and monitoring.

Our team provides two primary services – an added layer of quantitative and qualitative due diligence of the provider's investment options and an added layer of legal protection to the plan sponsors. As opposed to taking the considerable legal risk in offering such a solution internally, defined contribution providers can look to us for these services and instead focus on expanding their businesses.

Adding to our core services, we recently developed a retirement income solution that optimizes both the product allocation and asset allocation for traditional investment products and advanced retirement income products. With this solution, we have been targeting four types of firms: 401k providers seeking rollover assets and/or offering in-plan guaranteed products, institutional guaranteed product manufacturers and financial advice providers. This solution will offer firms guidance as to "how much" and "when" to allocate to guaranteed products. While some of these products are designed to accrue benefits during accumulation, many only make sense for investors at or near retirement, with the appropriate amount depending on the product details. To account for these considerations, our framework generates easy to understand product and asset allocation solutions that explicitly account for key features of these complex products.

Even though many firms have identified the need for a retirement income solution, only a few seem poised to take a leadership role in implementing one. Because of our team's business development and collaboration efforts in 2009, however, we believe that we are well positioned to experience growth in this arena next year.