401k-focused advisors looking for help explaining the benefits of collective investment trusts (CITs) to plan sponsors have some new resources to tap.
Wilmington Trust, the first financial institution to launch searchable tickers for CITs, recently hosted a webinar and launched a new whitepaper to highlight the advantages of CITs for advisors working with sponsors of defined benefit and defined contribution plans—particularly 401k plans.
The content, created in collaboration with MFS Investment Management and Retirement Law Group, also previews what to expect for the future of CITs as a retirement investment vehicle with more than $3 trillion in assets, according to Cerulli Associates.
The webinar, held April 27, was attended by 264 advisors, consultants and plan sponsors, and coincided with the launch of a whitepaper on CITs titled, Collective Investment Trusts: An Important Piece in the Retirement-Planning Puzzle.
In a May 15 statement, Wilmington Trust said the webinar and whitepaper detail how advisors can ask plan sponsors the right questions to ensure more effective strategic planning that includes access to these investment vehicles, which regularly offer lower costs and more flexibility than similar mutual funds and ETFs.
The content also describes how the use of CITs can help shift the dialogue from passive to active management, which can help plan sponsors and participants achieve long-term retirement goals.
The leaders of the webinar and authors of the whitepaper are Rob Barnett, head of retirement distribution, Wilmington Trust; Jessica Sclafani, director, retirement strategist, MFS Investment Management; Jason C. Roberts, CEO, Pension Resource Institute and managing partner, Retirement Law Group.
“It’s critical for our industry to gain a better understanding of CITs and why they should receive strong consideration for any defined contribution plan,” Barnett said. “We’re proud to have created this webinar and issued this paper to help advisors and plan sponsors understand all of the investment vehicles available to them and help them make informed choices for their participants.”
The future of CITs
As for the future of CITs, the three authors point out that more work needs to be done to raise awareness and increase adoption of CITs. This can be accomplished through continuing educational efforts, as well as technology investments to streamline CIT-related operations.
Additionally, changes in federal law are necessary in order to increase access to CITs for 403(b) plans, which at $1.06 trillion in assets, represents the second-largest segment of the U.S. defined contribution market, according to the Investment Company Institute.
“MFS has a long history of offering CITs and we understand how they can offer potential benefits to plan sponsors and their participants,” Sclafani said. “Looking forward, we believe the DC industry will continue to see greater implementation of transparent investment vehicles—both in terms of fees and reporting—which we are committed to support.”
As an active manager, Sclafani said MFS Investment Management is focused on delivering value in the most efficient delivery mechanism possible, which includes CITs.
“We are often asked by retirement plan advisors and consultants about the role they can play in helping their clients comply with applicable laws and regulations when selecting CITs for their plans,” adds Roberts. “In both the webinar and whitepaper, we were able to answer many of those questions and point advisors and sponsors towards actionable steps they can take to facilitate prudent processes and decision-making.”
Continuing effort to tout CIT benefits
The webinar and whitepaper are the latest milestones in a program to underscore the potential benefits of CITs that began last year with the partnership between Wilmington Trust and the Nasdaq Fund Network (NFN), a global dissemination service whose mission is to bring greater retail investment transparency to the world’s financial markets.
Wilmington Trust collaborated with the NFN to provide searchable ticker symbols for more than 200 CITs for the first time, enabling stakeholders to more easily access information on these vehicles and addressing a lack of transparency. Advisors, broker-dealers and investors are able to access CIT price and performance information across a variety of market data platforms.
Wilmington Trust has more than $50 billion in CIT assets under administration across funds managed by more than 45 sub-advisors and available on more than 47 trading platforms as of March 31, 2020. As a fiduciary, Wilmington Trust collaborates with more than two dozen industry partners, including MFS Investment Management, to offer access to CITs.
SEE ALSO:
• Bill Introduced to Allow Collective Investment Trusts in 403(b)s
• Are 401k Advisors (Getting) More Familiar with CITs?
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
