Andrew Arnott cites megaplan segment’s shift toward nonrecordkeeper offerings, along with recent feedback from investment consultants and elite DC plan advisors
BOSTON, February 6, 2017—John Hancock Investment Management published a new white paper today entitled “Target-date funds: embracing open architecture in retirement’s most important investment option,” by Andrew G. Arnott, President & CEO. The paper argues that investors in target-date funds deserve the same benefits afforded by open-architecture lineups at the plan level, and draws on data and anecdotal feedback from a variety of third-party surveys of plan sponsors, investment consultants, and elite DC plan advisors.
“Today, plan-level best practices call for an open-architecture, or multimanager, lineup of investment offerings, but that line of thinking rarely extends to target-date portfolio construction,” said Mr. Arnott. “If open architecture is important, then perhaps more target-date funds should be open, incorporating a variety of specialized teams based on their merits.”
The paper notes that participants benefit from asset manager diversification, and many larger plan sponsors have already moved to reduce the risks of manager concentration by complementing or replacing single-manager target-date funds in their lineups with multimanager target-date funds. However, other sponsors, particularly among the midsize and smaller plan segments, may still have work to do—especially in light of increasing plan-related litigation and prospective changes across the retirement regulatory regime.
This is part of a broader focus the firm is making in 2017 on target-date investing inside of retirement plans. “Our more than 20 years of experience overseeing multimanager asset allocation portfolios for retirement plans have taught us the wisdom of this open-architecture approach,” said Todd J. Cassler, president of institutional distribution. “Now more than ever, we believe DC plan sponsors and advisors should consider extending these benefits to target-date fund investors.”
Asset allocation portfolios at John Hancock Investment Management total over $53 billion.* The firm is supporting the target-date initiative with a full complement of advertising and educational resources for DC plan sponsors, advisors, consultants, and participants—including the new white paper—available at jhinvestments.com/targetdate.
About John Hancock Investment Management
John Hancock has helped individuals and institutions build and protect wealth since 1862. Today, we are one of the strongest and most-recognized financial brands. We serve investors globally through a unique multimanager approach: We search the world to find proven portfolio teams with specialized expertise for every strategy we offer, then we apply robust investment oversight to ensure they continue to meet our uncompromising standards and serve the best interests of our shareholders. Our approach to asset management has led to a diverse set of investments deeply rooted in investor needs, along with strong risk-adjusted returns across asset classes.
About John Hancock Financial and Manulife
John Hancock Financial is a division of Manulife, a leading Canada-based financial services group with principal operations in Asia, Canada, and the United States. Operating as Manulife in Canada and Asia, and primarily as John Hancock in the United States, our group of companies offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents, and distribution partners. Assets under management and administration by Manulife and its subsidiaries were CAD$966 billion (US$862 billion) as of September 30, 2016. Manulife Financial Corporation trades as MFC on the TSX, NYSE, and PSE, and under 945 on the SEHK. Manulife can be found at manulife.com.
The John Hancock unit, through its insurance companies, comprises one of the largest life insurers in the United States. John Hancock offers and administers a broad range of financial products, including life insurance, annuities, investments, 401(k) plans, college savings, and other forms of business insurance. Additional information about John Hancock may be found at johnhancock.com.