In securities lending and collateral management, plan sponsors face a series of ongoing challenges, including balancing resource expenditures to revenues generated, identifying appropriate investment vehicles for collateral management, and understanding the lending activity in their ETFs, mutual funds and other commingled investment pools.
Changes brought on by the growth of defined contribution plans will have slow moving but long-lasting impacts, Finadium says. Finding solutions to these problems is important for plan sponsors to feel that their securities lending programs are successful and to avoid potentials for disruption or program mismanagement.
In custody, the problem of underfunded custodians relative to client needs continues, and with each passing year more assets move to non-traditional investments, leaving custodians to do more with less. Plan sponsors are aware that they are moving closer to the tipping point when they must either rework their custodian relationships or seek out third-party vendors to perform data aggregation and reporting tasks.
Plan sponsors have options for managing their programs and generating reasonably safe, risk-adjusted returns. The choice is whether institutions elect to sort out smaller issues now or wait until they become bigger issues later.
The research report was written for plan sponsors and their service providers to provide insights into the market environment for 2012. For plan sponsors, the report offers a peer-based analysis of program and service provider management. For service providers, the report offers a candid look at the needs and desires of the plan sponsor community.