Investment trends in the $4.5 Trillion Defined Contribution (DC) market are stretching the definition of an ‘open architecture’ investment platform. Historically, open architecture meant you or your partner offered a significant number of mutual funds from a variety of managers. While mutual funds still hold a significant amount of DC assets, alternative investments are taking hold and growing. Recent research from Celent predicts growth in non-mutual fund options, including Collective investment trusts, Exchange Traded Funds (ETFs), separate accounts and retirement income products. If an investment platform wants to remain truly ‘open,’ it will need to consider extending its mutual fund platforms to include these alternatives and the technology and operational challenges that go with them.
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Balancing retirement plan innovation with technology and operations
After the 2008 market collapse and recession, retirement providers have responded with new and varied products to address the shortcomings of many individuals’ retirement plans. Providers are challenged to create more innovative and robust solutions to address a wide variety of needs. At the same time, Information Technology (IT) groups are challenged to do more with less, extend the life of legacy platforms and limit major system changes and upgrades.
