Call it a bit of serendipity. Tom Gonnella is an expert in—among other things 401(k)-related—collective investment trusts, and like an umbrella salesman in a monsoon, his timing is impeccable.
Although in existence for decades, collective investment trusts are enjoying renewed attention in the wake of widespread regulatory and legal pushes for lower fees on investment products, defined contribution plans among them. Throw in target date and target risk funds for good measure, and Gonnella, president of Strategies Capital Management (SCM), is riding a wave in the perfect storm (or monsoon, to take the analogy to its nauseating end).
SCM, established in 1993 and with over $500 million under management and advisement, is the sub-advisor for target date strategies for TD Ameritrade, an indication of the confidence larger players have when placing their clients’ assets with the Denver-based firm.
“True best-of-breed target date funds have to be set in a CIT format,” Gonnella says. “They’re low cost and can be done more effectively than separately managed accounts, which is the way the industry has traditionally been doing it.”
For 401(k) advisors, the firm offers both institutional target date and target risk funds, the former chosen by anticipated retirement age and the latter based on an online risk tolerance review.
“Target date funds are important tools, which is one of the reasons they are so popular,” Gonnella adds. “However, pre-retirees that are ages 60 or 65 are not monolithic; they have different risk profiles and levels of comfort for which the TDF glide paths might not account. For this reason, target risk funds are just as important. Unfortunately, most people don’t understand the difference.”
He previously held various sales and marketing positions with Fiserv ISS, part of which eventually became heavy-hitter Lincoln Trust Company, where he climbed to executive vice president before making the entrepreneurial jump to boutique SCM, where innovative offerings like “Strategies’ Kids Financial Wellness Program” (currently sold out) are commonplace.
The firm emphasizes that it is “suited for serious investors…not those looking to shoot for the stars based on the latest gimmick or fad.”
“The investment philosophy that underpins our Strategic Target Risk fund series is firmly rooted in financial academia, including modern portfolio theory, the efficient market hypothesis, asset and factor allocation, and other core tenets of investing discipline. These principles are recognized as the key determinants of portfolio risk and return.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
