PLANSPONSOR - October/November 2018 - 27

Demand Grows for OCIO Services
GREG Calnon, managing director of
Goldman Sachs Asset Management
global portfolio solutions, and de facto
head of the firm's outsourced chief
investment officer (OCIO) business,
reflects on the growth of OCIO since
around the start of this decade.
PLANSPONSOR: Can you point to any
OCIO client trends, in terms of size of the
plans or liabilities?
CALNON: Larger corporations are an
interesting client group to talk about
right now. There is an expanding understanding
among large plans that OCIO
can mean what the client wants it to
mean. Large plans are coming to realize,
in order to get some benefit out of
working with a provider such as us, they
don't need to just hand over the keys to
the whole operation and wash their hands
of the ongoing management of their
pension. We like to work with engaged
clients, and we have many who have a full
pension staff and their own CIO working
TALKING POINT
Enrolling in a Rainy Day Savings Account
As an employee, why would you be
likely to sign up for a rainy day account?*
18%
To save
money
16%
To make
unexpected
expenses
less stressful
16%
The money
would be
off limits
12%
It would be
automatic
and easy
to set up
Why would you be unlikely to
sign up for a rainy day account?†
26%
Already
save on
my own
21%
Would be
able to do
this myself
on this stuff, and then we can come in
and complement and expand on their
capabilities where we are most needed.
Thinking back to 2010 or 2011, our sweet
spot for clients was probably $500 million,
not much bigger than that. Today the
marketplace has clearly evolved, and we
have multiple clients with multi-billiondollar
plans-up to $10 billion.
PS: Are more clients seeking OCIO services
tied to both defined contribution [DC] and
defined benefit [DB] plans?
CALNON: Absolutely. When there is both a
DC plan and a legacy DB pension in place,
more plan sponsors are recognizing they
have an opportunity to leverage OCIO
services. Up until recently, people were
used to talking about the DB and DC plans
as different pools of assets with different
objectives. And that is still true, but there
is also a better understanding that corporations
will benefit from taking a more
holistic approach to [their] retirement
benefits program. Additionally, there is
more acceptance of doing OCIO within the
DC plan as a stand-alone service as well,
although this is certainly not as common
as it is in the DB plan space.
" ... the signs are
clear that change
is coming quite
quickly ... "
Speaking more broadly to the issue,
I personally believe that the DC plan
space in general is ripe for disruption.
This business has been done a certain
way for a long time, largely based on
outdated traditions, and so the signs are
clear that change is coming quite quickly.
The focus on litigation, the focus on cost,
and the focus on outcomes have all made
people rethink this area-not to mention
the new opportunities to use technology to
shake up the status quo. -John Manganaro
20%
Don't need
or want
one
12%
* Total respondents very likely or somewhat likely to enroll: 1,856
Source: AARP Public Policy Institute, " Saving at Work for a Rainy Day: Results From a National Survey of Employees "
Have
insufficient/
uncertain
income
†Total respondents somewhat unlikely or very unlikely to enroll: 740
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