Low savings present challenges to those crafting post-work income solutions. Investment-processing provider SEI recently spotlighted challenges to money managers presented by generally low savings rates and the possibility of retirement shortfalls at both the individual and institutional levels.

"The asset-management industry has enormous potential given the wide retirement-funding gaps baby boomers are facing," says Paul Schaeffer, managing director of Strategy and Innovation at SEI's Investment Manager Services division and moderator of the 2007 SEI Executive Conference. "While the industry can't fix these problems alone, it can provide innovative product solutions that help bridge the gaps."

New products, new approaches

The three-day conference focused on trends in the retirement-income business. One panel categorized emerging new products into four distinct classes: "liberated" vehicles that incorporate non-traditional assets, outcome-oriented products, packaged-advice offerings like unified managed accounts, and creative funding options like reverse mortgages. Panelists estimated that these classes of products could represent a $15 trillion to $20 trillion market by 2010.

These new products will demand new business models and product-development skills that bring together investment banking, capital markets, insurance, and consulting capabilities. "Asset managers don't have to build it all themselves," says Jay Giacco of ING Investment Management. "It can make sense to focus on investment process quality and partner with others to create new products."

Another panel deliberated on new demand trends in institutional investing, where hedge funds with "institutional quality" infrastructure was on an upswing. "Institutions are looking for brand as a way to find the transparency, stability, and infrastructure they want in a hedge fund," says panelist West Chapman of Goldman Sachs Asset Management. "They recognize that hedge funds have an entrepreneurial bent, but are rapidly becoming more institutionalized."

 Oaks, Pa.-based SEI administered $382.4 billion in mutual fund and pooled assets and managed $190.0 billion in assets on 31 March 2007. -FWR

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