Institutional money managers and consultants that work with corporate pension plans will face increased competition, based on the results of a new survey by Chatham Partners. Structural, regulatory and accounting changes created by the Pension Protection Act and the Financial Accounting Standards Board’s Statement 158 are creating “profound changes” to the $2.3 trillion private-sector defined benefit plan market, and managers and consultants expect that “search activity will increase, given perceived high levels of interest in new products, tools and approaches for managing plans,” the survey indicated. “However, the realized level of search activity to date, for many, has been less robust than hoped for. … While there appears to be a large contingent that may be inclined to change, very few are committed to doing so.”
The survey of 626 plan sponsors, 36 managers and 39 consultants was conducted in May.
According to the survey, 61% of all respondents expected search activity industry-wide to increase, but of plan sponsor respondents, roughly half doubted they will make changes at all.
The “near-term complexity” of the regulatory changes should “spur usage of consultants by plan sponsors,” according to the survey. Managers also reported increased use of actuarial and consulting resources “to provide a more holistic approach to client service.”
As a result, 27% of managers and 33% of consultants are developing enhanced asset/liability modeling capabilities. Also, 27% of managers and 34% of consultants are working on increasing the knowledge level of their personnel.
