Chris Ford, head of investment for Europe, the Middle East and Africa for Towers Watson & Co., was quoted recently in the Financial Times as calling the defined contribution market in the U.S. “"a horrible market' due to being "completely asset-gatherer driven.'”
In an interview with Pensions & Investments, he explained that the design of DC in the U.S. has been led by profit-motivated money managers and by giving members “what they want, but not what they need.” He clarified that the market is “horrible from a member's perspective.”
Whereas government-led nationwide structural reforms of DC are under way in Australia and the U.K., Mr. Ford says a similar effort is unlikely to be led in the U.S. by money managers.
“In order to get (structural reform), there probably needs to be some influence from the government/corporate sponsor end of the spectrum, where people are focused on the overall outcome, instead of the asset management end where people are mainly focused on detailed implementation,” he said.