Nearly two-thirds, 61%, of consultants said their DC plan clients will add either a Treasury or government money market fund to emphasize capital preservation and risk management, according to a survey released today from PIMCO.
A similar percentage also said they are helping evaluate clients existing stable value offerings by studying the underlying manager performance, according to the 2009 Defined Contribution Consulting Support and Trends Survey.
Given the extreme market volatility and significant decline in DC account balances over the past year, its not surprising that DC plan sponsors are focused on reducing the risk that participants face in their DC plans, Stacy Schaus, senior vice president and PIMCOs DC practice leader, said in a news release accompanying the survey. Consultants are helping clients evaluate their DC plan investment structures, often to dial down risk and improve the likelihood that the plans will meet participants retirement income goals.
The survey also revealed that consultants are working with clients to assess volatility and inflation risk in their plans. Respondents report that plans are adding asset classes that increase diversification and help hedge against a rising inflationary environment.
All of the respondents surveyed said inflation protection is somewhat important to critical in DC plans, citing TIPS, commodities and REITs as the top three investments for achieving this goal.
The survey covered 32 U.S. consulting firms that represent about 1,400 clients with total DC assets of $1.6 trillion and was conducted from late December through late January.