The 95%

RPAG Chief Investment Officer, Jeff Elvander, ventures into the critical components of retirement plan investment options and reveals a key statistic; the investment options in a plan can represent up to 95% of the total plan cost. After highlighting the importance of understanding this key component, Elvander discusses the various aspects that go into making investment alternatives significant in determining the retirement environment.

The Weight of 95% | Why Investment Options Matter

Elvander starts out by emphasizing that the investment alternatives in a retirement plan are the foundation, accounting for as much as 95% of the plan's overall cost. He makes it clear that there are other factors besides cost that determine how important an investment opportunity is. Cost is undeniably an important consideration, but argues that choosing an investment option purely on the basis of low cost may not always result in the best possible outcome.

The Skill Premium | Identifying the Best Managers

Jeff discusses the idea of the "skill premium," emphasizing how difficult it might be to separate skill from luck in the field of investment management. He highlights the need of identifying knowledgeable fund managers and explains how RPAG uses an extensive scorecard to determine which performers are the best. The scorecard, which has been in use for more than 20 years, has a special feature that distinguishes RPAG from other scorecard systems: returns-based style analysis (RBSA), a predictive analytic.

The Back Study | Unveiling the Scorecard's Effectiveness

He offers the results of the RPAG back study to support the effectiveness of the scoring system. In this research, funds' ten-year performance is examined, and their degree of alignment with scorecard evaluations is evaluated. Even in difficult market conditions, the findings consistently show that choosing funds according to the qualitative and quantitative criteria on the scorecard produces better results.

Navigating Challenges | Regulatory Hurdles and the RPAG Advantage

Jeff provides personal accounts of regulatory obstacles that occurred during the back study publication process. RPAG continues to work to enhance its scorecard in spite of challenges, using past results and the RBSA advantage to maintain a tried-and-true procedure. He highlights the value of considering more than just indicators of performance when choosing funds and the significance of qualitative considerations in the process of making decisions.

The RPAG Advantage | Leveraging Assets for Cost Efficiency

Moving on to the subject of cost effectiveness, Elvander demonstrates how RPAG makes use of its sizable assets to persuade fund managers into offering it the best rates. He showcases Collective Investment Trusts (CITs) as an affordable alternative, highlighting the benefits of increased fiduciary protection and reduced fees. As a result of RPAG's dedication to fee negotiation, average savings have been around 30%, which serves as a significant lever to reduce overall plan costs.

New Offerings | Expanding the Array of Investment Options

He recently announced the opening of a third small-cap growth option and a second midcap value offering. These additions, which are well-managed by respectable companies and have a high score on the RPAG scorecard, further demonstrate RPAG's dedication to providing its members with a wide range of successful investment options.

The Best of Both Worlds | RPAG's Holistic Approach

Jeff Elvander concludes by considering RPAG's methodology and highlighting its dual function as an advisor and an aggregator. He notes that there is a dichotomy in the industry between institutional consultants and aggregators, but argues that RPAG is not easily defined because it is involved in both sectors. RPAG positions itself as uniquely qualified to meet various requirements of its members by providing a full range of services, from customized asset allocation services to retirement income solutions. From the skill premium to back studies, regulatory obstacles, cost effectiveness, and new products, he demonstrates RPAG's dedication to giving its members a comprehensive and successful retirement planning strategy. RPAG remains at the forefront, navigating obstacles and generating opportunities for its members as the retirement landscape changes.

To view the presentation slides, click here!

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