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Russell Investments invests in NextCapital

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Global asset manager Russell Investments is one of the lead investors in a USD6 million investment in NextCapital (formerly Business Logic).

The Chicago-based digital adviser is the technology provider behind the delivery of the Russell Adaptive Investing methodology to individual participants in defined contribution (DC) plans.
 
“DC plans are the primary retirement vehicle for most Americans today, so there is a strong need for continued advancement in retirement savings options that use an outcome-oriented, multi-asset approach and can be customised at the individual level,” says Josh Cohen, managing director and head of institutional defined contribution. “Our investment in NextCapital reflects our commitment to be at the forefront of defined contribution innovation and our belief that Russell Adaptive Retirement Accounts represent the next generation of default investing.”
 
Jeff Eng, director, retirement income solutions, adds: “Russell’s strategic investment in NextCapital will enable the company to further enhance its capabilities in support of Russell Adaptive Retirement Accounts, including the addition of account aggregation technology (ability to tether all investment accounts of an individual so as to obtain a more holistic picture of his or her retirement and be able to provide better advice), embedded auto escalation features and decumulation strategies.”
 
In 2013, Russell launched Russell Adaptive Retirement Accounts, personalised managed accounts designed to be cost-efficient and easy to use, like target date funds, but that go a step further toward increasing the probability of participants reaching their targeted retirement income goals by creating a customised asset allocation for each participant. In developing Russell Adaptive Retirement Accounts, Russell partnered with NextCapital and used its secure technology platform to bring to life the Russell Adaptive Investing methodology that is the foundation of Russell Adaptive Retirement Accounts.
 
Russell Adaptive Retirement Accounts, which leverage a DC plan’s existing investment options, create customised asset allocations for participants by drawing on information available through DC plan sponsors’ record keepers or human resources systems, including age, gender, salary, current account balance, contribution rate and DB pension benefit (if eligible). These personalised asset allocations are then monitored and adjusted on a quarterly basis – without any hands-on action required by participants – based on how well each participant is tracking toward his or her retirement income goals.
 
“Selection of a defined contribution plan’s qualified default investment alternative (QDIA) is a critically important decision facing today’s plan fiduciaries. We’re excited to continue working with NextCapital to further enhance our next-generation QDIA option for plan sponsors and participants, in an effort to provide individuals with a greater likelihood that they will achieve their retirement goals,” says Cohen.

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