Josh Cohen wants to bring outsourced-CIO (OCIO) services to the defined contribution (DC) market. It’s not a secret—and Russell isn’t the only OCIO player eyeing this market—but outsourcing and the related institutionalization of DC is a key focus for Cohen and his colleagues.
“People want to make sure there is alignment of interests and accountability for those providing the advice,” he says. “Using OCIO, you can better align those interests and there is greater accountability.” Cohen also espouses the benefits of “true outsourcing”—handing over full responsibility to an OCIO provider. “If you’re going to outsource it has to be true outsourcing,” he argues. “If the provider is only managing certain aspects then there’s not as much accountability. It should go much further than just manager selection.” Within DC, very few plan sponsors have the ability to do everything themselves, making outsourcing an attractive option, Cohen adds.
OCIO is a well-known and widespread phenomenon. But what does the future of DC look like? “Adaptive retirement accounts,” according to Josh Cohen. “We recently went live with these in Russell’s own plans,” he says. These products analyze information including gender, salary, savings, contribution rates, and defined benefit pension details to estimate retirement income and rebalance quarterly based on those estimates. “Target-date funds have been a great offering,” Cohen says, “but they are just based on age. These accounts look at other factors for a more customized option.” If all goes well, bespoke data will provide a big boost to DC plans—getting participants one step closer to retirement security. —Nick Reeve