Our Clients

Quickly Target Retirement Assets

For almost 40 years, a Los Angeles-based investment management firm serving institutional and high-net-worth clients had attained steady account growth by offering its investors a wide array of investment products.

Given its rapid growth in terms of asset flows and increasing penetration of the 401(k) retirement plan market, it was apparent that the firm needed to find a more economical way to capture that opportunity. Offering a more competitively-priced product to the institutional market would have meant reducing the firm’s overall management fee revenue, since fee reductions would have to apply to all investors.

The firm had both retail and institutional investors commingled in their mutual funds. By establishing a strategic partnership to launch a CIT, the firm could:

  • Offer a new type of retirement investment vehicle specifically aimed and priced for the retirement plan market without negatively affecting revenue earned from other service offerings. 
  • Provide flexibility in making available investment solutions designed to meet certain plan sponsor and participant-level objectives.
  • Cost-effectively start up new funds with specific investment objectives that seek to fill specific asset allocation needs.

In order to offer a viable CIT product, the firm needed to address these challenges:

  • Lack of in-house knowledge. By law, CITs must be maintained by a bank or trust company. Despite technically being a trust company, the firm felt it didn’t have the most up-to-date capabilities or in-house knowledge to offer a CIT product.
  • Inability to process trust accounts in a daily-valued environment. To be competitive, CIT investment managers require a comprehensive and technologically advanced platform that can handle all components of a collective investment trust, including plan record keeping services, connectivity to the NSCC, investment accounting for all security types, daily unitization capabilities, and valuation services. When the firm decided to offer a CIT, it did not have these capabilities in-house.
  • Lack of resources needed to meet audit and reporting requirements. Parties offering CITs must work with applicable banking regulators and specific and often complex audit and reporting requirements associated with the CIT structure.

To bring a CIT to market relatively quickly and affordably, the firm felt the optimal solution was to find an experienced provider with whom it could partner to create a comprehensive solution.

An experienced partner

As the firm performed its due diligence and more detailed conversations occurred, SEI provided education on the unique characteristics and requirements of CITs.
The firm noted our competitive advantages:

  • A fully scalable infrastructure and state-of-the-art operating systems that would allow the firm’s operating capabilities to grow in step with their CIT business.
  • The ability to bring new CITs to market quickly.
  • A complete array of services, including trustee, accounting, administration, distribution, transfer agent, and plan-level services.
  • Superior fund-level transparency and reporting.

The firm knew it needed to select the right trustee partner from the start. Unlike a mutual fund, where a firm can change administrators relatively easily, it’s more complicated, costly, and time-consuming for a CIT to change trustee partners. The importance of “getting it right the first time” with a knowledgeable provider was ultimately the most decisive factor in the firm choosing to partner with SEI.

Operational, compliance and fiduciary oversight

The firm benefits from our core collective trust services, which include:

  • Trustee services (provided by SEI Trust Company). SEI Trust Company bears the fiduciary responsibility to manage the CIT in the manner outlined in the Declaration of Trust and associated investment guidelines, to establish the associated investment guidelines in partnership with the investment advisor, to provide the final review in order to accept only eligible investors for investment in the CIT, to prepare and file CIT documents with the applicable regulatory authority, to oversee all CIT service providers and to retain discretionary investment management responsibilities over the CIT.
  • Accounting and administration services. This includes daily reconciliation of all share and cash positions, delivering cash balances via online tools, processing fund-level security and shareholder trades, managing the entire financial statement process, supporting the audit process, and processing all required regulatory filings.
  • Transfer agency services. Using a transfer agent that has the ability and expertise to process collective investment trusts and mutual funds can result in additional value and savings. SEI’s technology platform integrates with transfer agents that are authorized NSCC participants, making it easy for record-keepers to trade mutual funds and collective investment trusts via the same platform. This creates efficiencies for the transfer agent, record-keepers and the firm.

Hitting the ground running

As a result of strategically partnering with SEI, the firm:

  • Went to market with a financially competitive retirement product on a short schedule -- not the six month period the firm expected it would have taken to develop the functionality on its own.
  • Avoided the cost and time implications of developing plan and regulatory documents internally.
  • Maintained margins on its mutual funds business because offering a separate CIT allowed the firm to create market segment-specific fees and avoid cannibalizing its higher fee products.
  • Can launch additional CITs quickly without having to increase headcount.

To learn how SEI’s Collective Investment Trust services can help your firm quickly and cost-effectively enter the market, contact us online, by phone +1 610.676.1270 or email: