A diverse group of investment experts has formed a new trade organization to fill a perceived gap in the defined contribution market.
“This is a response to the evolution of the retirement system in the U.S.,” added Stacy L. Schaus, chairwoman of the newly formed Defined Contribution Institutional Investment Association and senior vice president for defined contribution practice at Pacific Investment Management Co. LLC., Newport Beach, Calif.
That evolution includes the growth of defined benefit contribution plans at the expense of defined benefit plans, an emergence of target-date funds, increasing customization strategies, a broader diversification of DC plan portfolios and an effort by DC plans to reduce portfolio volatility.
“People need help to make the most optimal plans,” Ms. Schaus said. “We're not as much focused on participation rates as we are focused on retirement income goals.”
The membership list represents a “Who's Who” of defined contribution experts at large investment and insurance companies as well as consultants, lawyers and financial/retirement researchers. Prominent players include Mercer LLC, Morningstar Inc., Wells Fargo & Co., Wellington Management Co. LLP and Callan Associates Inc.
“It wasn't a roomful of strangers that put this together. We've known each other for years,” said Mr. Carrington, who leads the association's retirement income committee. “Some of us have worked together at points in our careers — or competed against one another.”
Although there are trade associations and/or lobbying groups representing many elements of the retirement planning, advising and investing fields, DCIIA members said none provided a strong enough emphasis to achieve their goals.
“Our mission and purpose are sufficiently distinct,” said Ms. Schaus. “There isn't enough focus (in other associations) on what we want. Some have a defined-benefit focus first, some focus on record keeping (and) some focus on health.”
The DCIIA members interviewed by Pensions & Investments said they aren't competing with other trade groups. “We're not trying to be against anyone who's out there,” said Richard A. Davies, head of product strategy in the defined contribution unit at AllianceBernstein LP, New York. “There's part of the story that's being missed.”
Mr. Davies directs the DCIIA investment policy and design committee; and he said there will be a difference between DCIIA's approach and that of some other organizations.
“Existing trade associations are product driven in many cases,” he said. “We want to be product agnostic. We wanted to be clear: We want to improve the retirement outcomes for working Americans.”
Mr. Davies said the DCIIA will educate plan executives, the public and politicians about what association members believe is an incomplete appreciation of the DC industry. “From a public policy standpoint, defined contribution plans seemed to be in many peoples' eyes synonymous with mutual funds,” said Mr. Davies, adding that “only about half” of DC plan assets are invested in mutual funds.
Association members prefer to do their work via education, research projects, position papers, seminars and conferences, Ms. Schaus said. They want to develop recommendations and tools for designing defined contribution plans because members believe many plan sponsors feel uncomfortable implementing institutional investment approaches, she added.
The DCIIA isn't registering as a lobbying organization, even though its mission statement includes an effort to “track and influence DC retirement security policy and legislation.” It has established an office in Washington, less than a mile northwest of the White House.
“Our group is a cross-section of different interests,” said Lew Minsky, a benefit-plan governance and compliance consultant in Jupiter, Fla., who is the association's executive director. “Our goal is to create better retirement outcomes for plan participants."