NEPC Hires Former PGIM Principal To Lead DC Solutions
BOSTON– April 1, 2024–(BUSINESS WIRE)– NEPC, LLC, one of the industry’s largest independent investment consulting firms, overseeing $1.6 trillion in assets under management and advisement, announced that Mikaylee O’Connor will join the firm as Principal, Head of Defined Contribution (DC) Solutions, effective April 1st, 2024. O’Connor will be responsible for leading the way NEPC’s DC practice delivers innovative and creative solutions to clients. As the retirement space continues to evolve, O’Connor, in addition to serving clients, will oversee NEPC’s DC plan trends research and data analytics, guiding strategic initiatives related to target date funds, managed accounts, retirement income solutions, and other investments that are vital to the retirement outcomes of participants. She will report directly to Bill Ryan, Partner, Defined Contribution Team Leader.
“As a team, we are focused on helping our clients navigate and leading the discussion around issues relating to retirement income,” said Bill Ryan, NEPC’s Partner, Defined Contribution Team Leader. “Mikaylee’s extensive experience and deep expertise working with a diverse client set will position NEPC to continue identifying innovative solutions that help alleviate those concerns.”
Before joining NEPC, O’Connor was a Principal, Senior Defined Contribution Strategist within PGIM DC Solutions. She provided thought leadership to clients and supported the development of forward-thinking solutions designed to improve participant outcomes. Prior to that, O’Connor spearheaded RVK’s DC practice as their Head of DC Solutions overseeing strategic direction and growth of the practice. Her unique perspective will continue elevating NEPC’s DC Solutions platform as an industry-leading consultant and trusted partner.
As a thought leader in the DC space, Mikaylee sits on the DCIIA Operating and Executive Committees and has been influential across many other industry groups, such as NAGDCA, where she is on their Legislative Committee.
“Joining NEPC’s esteemed and innovative team marks an exciting phase in my career,” said O’Connor. “We are currently undergoing a unique transition in the retirement space. I am eager to contribute to the firm’s trajectory and partner with our DC team and clients to lead the creation and delivery of world-class DC solutions.”
About NEPC, LLC
NEPC is an independent investment consultant, private wealth advisor, and OCIO provider serving over 400 retainer clients and $1.6 trillion in total assets. Combining a proprietary investment team dedicated to the long-term challenges facing investors with our unique client-centric model, NEPC builds forward-looking investment portfolios for institutional investors and ultra-high-net-worth families. To learn more about NEPC, visit nepc.com.
Pensions & Investments: Participant Interaction Minimizes Losses
NEPC’s Emma O’Brien was quoted in a recent Pensions & Investments article which focuses on Defined Contribution trends despite last year’s market meltdown. View the article on Pensions & Investments’ site here.
Despite last year’s equity and fixed-income rout, DC participants and sponsors take long-term view.
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Last year’s market meltdown didn’t derail certain DC trends and didn’t trigger new ones, said Emma O’Brien, the Boston-based senior consultant for the NEPC LLC defined contribution team.
Clients maintained their long-term perspective, Ms. O’Brien said, adding that the industry doesn’t make quick changes.
“What will drive changes is target-date funds” at the expense of core menu options, she said.
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Ms. O’Brien said there were “no significant trends in outflows” from DC plans last year. In 2023, some clients will review their investment structure, a typical client response.
“We’ve heard limited feedback from plan sponsors that participants are asking for change in lineups, and that’s driven by the fact that our clients generally have well-structured investment menus that offer core menu options that span the risk spectrum,” she said. “Participants have the option to be conservative, aggressive, or somewhere in between based on their own goals or their market views.”
Click here to continue reading the full Pensions & Investments article.
Pensions & Investments: Social Security's Woes Highlight Need for Holistic Plan
NEPC’s Bill Ryan was featured in a recent Pensions & Investments article which focuses on the uncertain future of Social Security and what plan sponsors can do to prepare participants. View the article on Pensions & Investments’ site here.
Given Social Security’s uncertain future, defined contribution executives say that it’s important for plan sponsors to offer participants holistic retirement planning and encourage additional savings.
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A reduction in Social Security benefits would lead to an increased strain on the defined contribution system, according to Bill Ryan, Chicago-based Partner and Head of Defined Contribution Solutions at NEPC LLC.
In the case of lower benefits, many individuals would need to rely more on their 401(k) plan for retirement income, he said. To do so means that “it’s going to put more pressure on the 401(k) balance, draw down faster, and you could see it depleting sooner,” Mr. Ryan said.
Mr. Ryan called it a “compound effect: Social Security reduces; more money comes out of the 401(k) plan (and) runs out quicker. And so, assuming returns are constant for everyone, the only way to start planning for this is to incrementally save more to backstop that.”
. . .
NEPC’s Mr. Ryan said Social Security needs to be discussed more within the retirement industry, as well, since it “tends not to be (at) the forefront of the participant communications.”
“I think Social Security should get more attention (from) consultants and plan sponsors, especially in light of the attention towards annuities,” Mr. Ryan said. “Social Security is an annuity, and it’s a lower-cost annuity. So it’d be unfortunate if that wealth management strategy was compromised.”
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If Social Security benefits are reduced, “it’s not going to change a person’s need to pay their mortgage, pay their car loan, (or) pay whatever they were planning,” Mr. Ryan said. “That (loss) is going to have to come from other forms of savings like DC, and if we’re not planning for that,” it could cause people budgetary issues.
That’s why Mr. Ryan said “there should be more guidance to encourage faster escalation of savings rates or maybe tax credits for higher matches.”
. . .
Mr. Ryan said delaying the age at which someone takes Social Security is still valuable, but it’s a hard sell.
“If someone were to take it later, it puts less of a strain on the trust,” he said. “And there’s an absolutely incremental value that the participant will actually be able to get more from it, but it’s hard to make that human trade,” and give up immediate money for possible money in the future, especially given the system’s uncertain future.
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Pensions & Investments: Retirement Tiers Emerge from Hiding in DC Plans
NEPC’s Bill Ryan was quoted in a recent Pensions & Investments article which focuses on the ABA Retirement Fund’s investment tier for those approaching or in retirement. View the article on Pensions & Investments’ site here.
In December 2020, as the world grappled with the pandemic, the ABA Retirement Funds program — a retirement plan used by some 4,100 law firms and organizations connected with the practice of law — rolled out an investment tier designed specifically for retirees and those nearing retirement.
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The majority of plan sponsors already offer retiree-focused investments but haven’t spent the time to package and market them as a retirement tier, said Bill Ryan, a partner and head of defined contribution solutions at NEPC LLC in Chicago.
Plan sponsors haven’t gone the extra step of saying, “Of the 10 options we provide, these three are the best to use for short-term needs in retirement to draw down,” he said. “The majority are not marketing it, even though they have the parts.”
Mr. Ryan cited NEPC client data showing that 76% of plan sponsors offer stable value funds, 43% offer money market funds, and almost a third offer inflation-protection funds, three of the essential building blocks in a retirement tier.
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For some consultants, the traditional target-date fund, which is pervasive in plans, is the ultimate retirement tier, even though it isn’t marketed as such.
“We believe that the No. 1 retirement income solution is a target-date fund plus systematic distribution as the first line of defense,” Mr. Ryan said.
While the target-date fund feels like a “vanilla concept,” it is “probably the best option in retirement because some professional has built a portfolio that’s targeting a 4%, 5% or 6% rate of return in retirement,” he said. “If an individual is taking out 4% or 5%, it matches the dividend that they need to draw for an income without depleting the balance in retirement.”
For Mr. Ryan, the target-date fund is akin to Batman. “It’s the hero we need; maybe not the hero we want,” he said.
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Financial Advisor IQ: Retirement Plan Sponsors Find Pain Point in Income Solutions: Report
NEPC’s Bill Ryan was recently quoted in a Financial Advisor IQ article to discuss how defined contribution plans are seeking help navigating target date funds as a result of recent regulatory and legal actions, according to our 2022 DC Plan Trends & Fees Survey. View the article on Financial Advisor IQ’s site here.
Retirement income products remain popular among defined contribution plans, but sponsors are increasingly seeking help navigating them, including by tapping the services of outsourced chief investment officers, according to a recent report.
Target date funds, which offer installment withdrawals as a source of income in retirement, continue dominating among retirement income solutions, with 96% of DC plans reporting using them, unchanged from 2020, investment consultant and OCIO provider NEPC said it found in a survey of 119 clients and 207 DC plans, representing 2.2 million plan participants and $283 billion in combined assets.
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“Off-the-shelf and custom TDFs can have wide-ranging risk allocations, expenses, and best practices for management and reporting — something recent regulation and court cases are looking to address,” Bill Ryan, partner and head of DC Solutions at NEPC, said in a statement. “As we’re likely to see continued focus on America’s retirement crisis in the years ahead, plan sponsors should be having hard conversations today about their fiduciary decision making and monitoring process for TDFs on their menu.”
Read the full article on Financial Advisor IQ’s website here.
NEPC Survey Shows Defined Contribution Plans Challenged by Booming Retirement Income Market, TDF Scrutiny
BOSTON–MARCH 7, 2023–(BUSINESS WIRE) — NEPC, LLC, one of the country’s largest research-driven investment consultants and OCIO providers, today published the 17th annual edition of its Defined Contribution (DC) Plan Trends and Fee Survey, which examines current plan investment trends, features, and innovations across major sectors, and how these plans have evolved over the years. Respondents to the 2022 survey included 119 clients representing $283 billion in aggregate assets and 2.2 million plan participants.
This year’s data showcases that retirement income solutions are more prevalent than what is typically discussed, with 84% of respondents currently offering their participants a retirement income solution – most often in the form of a Target Date Fund (TDF) that includes the flexibility to take installment withdrawals as a source of income in retirement. However, the survey also points to two major challenges for plan sponsors:
- There is still no consistency or real industry consensus on how to create meaningful retirement income solutions in pooled employer plans.
- A concurrent poll of NEPC consultants shows that retirement income solution selection is a pain point for many defined contribution clients. As the dedicated retirement income solution market has boomed over the past several years, many plan sponsors have struggled to evaluate their options strategically.
“As participants continue to demand retirement income solutions, plan sponsors are seeking trusted stewards to help them simplify what’s become a pretty complex evaluation and selection process,” said Alison Lonstein, Principal and Senior Consultant on NEPC’s Defined Contribution (DC) team. “This trend mirrors what we’ve seen in other segments of the retirement space – especially the increasingly complex ESG and legal environments. We’ve seen a significant uptick in clients asking for fiduciary training on the ESG landscape and requests for more insight and intel around legal news.”
NEPC’s 2022 survey also shows the continued dominance of TDFs in investment menus. Currently, 96% of respondents offer TDFs (unchanged from 2020) with 46% of total plan assets invested in TDFs (compared to 42% in 2020). While TDFs remain a popular option, plan sponsors are increasingly seeking guidance from investment consultants to help them better navigate rising scrutiny around these funds.
“Off-the-shelf and custom TDFs can have wide-ranging risk allocations, expenses, and best practices for management and reporting – something recent regulation and court cases are looking to address,” added Bill Ryan, Partner and Head of Defined Contribution (DC) Solutions. “As we’re likely to see continued focus on America’s retirement crisis in the years ahead, plan sponsors should be having hard conversations today about their fiduciary decision making and monitoring process for TDFs on their menu.”
Other key trends highlighted in NEPC’s new survey:
- Increased adoption of passive tier options: 2022’s data shows 83% of plans currently offer a passive tier (three or more index funds), an increase from just 66% in 2020.
- The growth of the DC plan OCIO market: As plan sponsors’ workforces and governance structures change, they are increasingly looking for OCIO solutions to streamline their plans. Throughout 2021, NEPC saw a 94% increase in OCIO assets (largely driven by a 17% increase in OCIO clients). Overall, 10% of NEPC’s DC clients are using the firm’s OCIO solution.
NEPC’s Defined Contribution (DC) Practice team will discuss the survey’s findings during a webinar on Thursday, March 8, 2023. Those interested in hearing how DC consultants are advising plans to address emerging opportunities can register for the webinar here.
The 17th Annual Defined Contribution (DC) Plan Trends and Fee Survey results can be downloaded here.
About NEPC, LLC
NEPC, LLC, is one of the country’s leading investment consultants and OCIO providers, servicing over 400 retainer clients with $1.4 trillion in assets1 with $301.2 billion in alternative assets2. Combining a proprietary research team dedicated to the long-term challenges facing investors with our unique client-centric model, NEPC builds forward-looking investment portfolios for institutional investors and ultra-high-net worth individuals. To learn more about NEPC, visit nepc.com.
1 As of 10/1/2022
2 As of 12/31/2021, NEPC provides some form of advice to all clients counted but does not advise all clients on all asset classes.
Media Contact:
Laura Nascimento
Pensions & Investments: Sponsors Mull New Methods to Fight Inflation
NEPC’s Bill Ryan was quoted in a recent Pensions & Investments article to discuss what he believes should be the primary defense against unexpected inflation for retirees. View the article on Pensions & Investments’ site here.
Pensions & Investments: SECURE 2.0 Fails to Provide All of the Help Sought by 403(b) Plans
NEPC’s Bill Ryan was quoted in a recent Pensions & Investments article expressing his disappointment that CITs failed to cross the finish line for 403(b) plans. View the article on Pensions & Investments’ site here.
Pensions & Investments: Opportunities Still Exist for CIT-Like Group Trusts in 403(b) Plans
NEPC’s Bill Ryan was quoted in a recent Pensions & Investments article to discuss 403(b) plan investment options after Congress’ failure to let executives offer collective investment trusts. View the article on Pensions & Investments’ site here.
