Pershing Prime Services Shares Key Insights for Alternative Fund Managers Looking to Defined Contribution Plans as a Growth Opportunity

March 26, 2015

Education about the asset class, including rewards and risks, will be central to adoption.

JERSEY CITY, N.J., - Pershing Prime Services today announced the release of a new paper to help alternative fund managers better understand what to consider when looking to include liquid alternatives in defined contribution (DC) plans. The paper, Liquid Alternatives and the Opportunity in Defined Contribution Plans, is the latest in Pershing Prime Services' Executive Insights series, which was developed to provide fund managers with information on the liquid alternatives convergence movement.

According to the paper, the retirement market may be the next frontier for the growth of liquid alternatives. As plan advisors are increasingly focused on new strategies to improve plan participant outcomes, liquid alternatives may present an opportunity to diversify retirement portfolios. The paper underscores the critical role that education will play in the adoption of liquid alternatives among DC plan fiduciaries, advisors and participants.

"The potential expansion into DC plans presents an opportunity for liquid alternative managers to help DC plan advisors understand how this asset class can fit into plan participants' retirement portfolios," said Mark Aldoroty, head of sales and relationship management for Pershing Prime Services. "As all parties become more comfortable with alternatives, the opportunity to include them in a plan’s investment strategy is likely to expand."

Since liquid alternatives are relatively new and don't come with a decades-long benchmarking history, fact-based education and training will play a central role in their adoption by DC plan fiduciaries, advisors and participants. Education should focus on both the benefits and risks of these investments in a portfolio, according to the paper. The paper also points out the need to change the conversation around risk in 401k plans from investment selection risk to retirement adequacy risk.

"At a time when strategic retirement planning is crucial to so many participants, there is a greater expectation among participants for more investment options that fit their retirement savings goals," said Rob Cirrotti, head of retirement solutions at Pershing. "DC plan fiduciaries should educate themselves on new products and explore whether these products will fit into their DC plan investment menu."

The paper also explores:

  • Elements of an attractive DC plan-focused alternative offering
  • How fund managers can address common reservations among plan advisors and fiduciaries
  • What DC plan advisors should consider communicating to DC plan fiduciaries
  • Critical evaluations for DC plans to make when considering alternative investments

About BNY Mellon's Pershing

BNY Mellon’s Pershing and its affiliates provide advisors, broker-dealers, family offices, hedge fund and ’40 Act fund managers, registered investment advisor firms and wealth managers with a broad suite of global financial business solutions. Many of the world’s most sophisticated and successful financial services firms rely on Pershing for clearing and custody, investment and retirement solutions, technology, enterprise data management, trading services, prime brokerage and business consulting. Pershing helps clients improve profitability and drive growth, create capacity and efficiency, attract and retain talent, and manage risk and regulation. With a network of 23 offices worldwide, Pershing provides business-to-business solutions to clients representing more than 6 million investor accounts globally. Pershing LLC (member FINRA, NYSE, SIPC) is a BNY Mellon company. Additional information is available on pershing.com, or follow us on Twitter @Pershing.

About BNY Mellon

BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries and more than 100 markets. As of March 31, 2017, BNY Mellon had $30.6 trillion in assets under custody and/or administration, and $1.7 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.

About Pershing Prime Services

Pershing Prime Services, the New Model Prime BrokerTM, delivers a comprehensive suite of prime brokerage solutions. We provide stable counterparty strength, extensive access to lendable securities, alternative sources of finance, dedicated client service, robust reporting tools, global execution and custodial solutions through the integrated platform of BNY Mellon. Pershing Prime Service is a service of Pershing LLC (member FINRA/NYSE/SIPC), a BNY Mellon company.