UBS Global Asset Management, Chicago, has formed a strategic alliance with Affiliated Computer Services Inc., Dallas, to offer administration and investment management to large companies with both defined contribution and defined benefit plans.
UBS would provide the investment offerings; ACS would provide administrative services and analysis of a companys DB and DC plans.
The partnership should appeal to officials at companies with both defined benefit plans and 401(k)s, but who want a single point of reference for advice, administration and investments, executives from both firms said.
Most plan sponsors who make changes to their defined benefit plan, make changes to their defined contribution plan at the same time, said Drew Carrington, head of UBS DC & Retirement Solutions Group.
UBS and ACS will target executives at Fortune 500 companies.
We believe more and more firms are looking for a single source in terms of a total retirement solution, said Michael Sigmund, senior vice president for ACS.
Many employees have accrued savings from a defined benefit plan and a 401(k). As part of its administration capabilities, ACS will provide a company with analysis on the amount of total savings its employees have received from both types of plans.
Having data of the defined benefit plan and defined contribution plans together helps us deliver better investment solutions to specific employee populations, explained UBS Mr. Carrington.
Armed with the analysis, officials in Mr. Carringtons group would offer each company an appropriate target-date fund as a default 401(k) option for its participants. UBS officials would also make recommendations on how much employees need to be saving to have a healthy 401(k) account balance for retirement, and would help the company set up an automated, escalated savings plan for those employees.
UBS Asset Liability Investment Solutions group would handle the defined benefit side.
While a company could outsource management of its entire defined benefit plan to UBS, Mr. Carrington said a potential client is more likely to use UBS to help manage the defined benefit plans interest-rate risk or to manage an alpha-generation strategy. The groups staffers also could offer advice on risk management.
Consultants contacted for this story said other administrators offer services for both the defined benefit and defined contribution plans offered by an employer, and that bundled administration and investment management offerings for defined contribution plans are common.
UBS executives hope the full suite of investment and administration offerings for both defined benefit and defined contribution plans, which they say is unique, will appeal to clients.
Pulling it all together sounds pretty unique, said Lori Lucas, the defined contribution practice leader in the Chicago office for Callan Associates Inc. Ive seen different parts of this together at one firm.
Ms. Lucas noted that large firms such as Fidelity Investments, Boston, and T. Rowe Price Associates Inc., Baltimore, offer record-keeping, 401(k) investment options and expertise for defined benefit plans.
Theres a lot of interest from the investment managers and record keepers in looking at defined benefit and defined contribution (offerings) and combining them in the aggregate, she said.