One major i-banking player is hunting for an executive to shepherd its charge into the defined contribution space, sources report. The story underscores a dilemma that many defined benefit leaders face as they realize the importance of getting their funds onto 401(k) platforms.
As reported in the MFWire
's sister publication, the 401kWire
, last week, Goldman Sachs
is said to be working on getting a large, investment-only DC business in place. Though a partnership with ADP Retirement Services
has given Goldman limited access to the 401(k) market since the late '90s, the scale of that involvement is not equal to the firm's ambitions.
Understandably, Goldman wants to place its funds as prominently as possible in the DC market. Its strategy likely augurs a trend, as more and more DB plans are frozen and their managers look jealously towards the 401(k) market.
Unfortunately, a traditional DB specialist is unlikely to have anyone on board who firmly understands of the particularities of defined contribution. Moreover, the land rush on 401(k)s is essentially finished. While in the late '90s, there were openings for an investment-only DC manager like Janus
to walk in with custom-designed offerings, 401(k) menus have since expanded, and it's hard to imagine that useful innovations will be as easily hit upon these days.
No matter how large or illustrious a financial firm, it needs credibility within the 401(k) space specifically if it's to be viable as a DC player. That means, this late in the game, that it had better have a unique selling proposition. What Goldman and similarly inclined companies must ask is whether they're responding to their own needs, or those of potential clients.
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