By Randy Myers
Few retirement plans add a stable value fund without first consulting an advisor. It’s helpful, then, for stable value providers to understand how advisors evaluate and recommend—or decline to recommend—the product. At the 2025 SVIA Fall Forum, three advisors described what they look for, what they’re hearing from clients, and how they explain the asset class.
Their topline message for plan sponsors: stable value is typically the only lineup option whose primary objective is capital preservation rather than capital appreciation—and expectations should be set accordingly. That means acknowledging the trade-offs that come with contractual safeguards—added complexity and fees relative to some other options—while weighing the offsetting benefits.
Moderator Christina Burton, director at Galliard Capital Management Inc., led the discussion with Gregg Zimmerman, senior vice president, investments, Hand Benefits & Trust Co.; Jim Sotell, managing director at Comperio Retirement Consulting Inc.; and Sean McCaffery, a member of the Global Public Markets Team at Fiducient Advisors. The panel compared stable value with money market funds, outlined how they brief committees on market-to-book ratios and equity-wash provisions, assessed the impact of fee and litigation pressures, and reviewed the role of stable value inside target-date funds and managed solutions.
Framing stable value: objectives, time horizons, rules
The advisors said they often begin discussions with plan sponsors by clarifying stable value’s principal objective: capital preservation. From there, they pivot to the product’s long-term record and the pitfalls of trying to arbitrage rate moves by shifting between stable value and competing funds. They also explain the mechanisms that keep book-value liquidity credible—such as equity-wash rules for transfers into competing options. Both McCaffery and Sotell noted that committees respond better when these constraints are covered proactively—before a participant tries to move directly from stable value into cash and discovers a restriction after the fact. Zimmerman added that most large recordkeepers can administer equity-wash rules reliably when expectations are set early.
Stable value versus money markets: why the question keeps resurfacing
The panel agreed that comparisons with money market funds never disappear—especially when short-term yields spike, as they did from early 2022 through mid-2023, pushing money market yields above stable value crediting rates. Advisors counter this by focusing on stable value’s structural benefits: its ability to modestly extend portfolio duration, access spread sectors, and smooth returns under wrap contracts.
Market-to-book ratios: how to make them intelligible
Panelists spent substantial time explaining how they educate committees about market-to-book ratios, especially given differences between today’s market and the 2008 financial crisis. Sotell said a ratio below 100% today doesn’t carry the same implications it did then, when asset toxicity was harder to assess. He said he also reminds sponsors that book-value accounting and wrap protections act as a safety net in difficult markets. McCaffery noted that market-to-book discussions are most common among plans using separate account stable value funds, particularly when sponsors are engaged in corporate actions that could affect plan-level redemptions.
Headwinds: litigation, fees, and demographics
Asked about potential headwinds, McCaffery cited retirement-plan litigation—especially around fees—as an ongoing concern, elevating the importance of documenting provider selection and monitoring processes. Zimmerman said fee pressure now touches every part of the chain—from investment managers to wrap providers and trustees—driven in part by aggregators using scale to negotiate. Sotell pointed to demographics: stable value is used most by older workers and retirees, while many new participants default into target-date funds, muting organic growth.
Structure choice: general account vs. synthetic
Asked what they advise sponsors to consider in choosing between a general account stable value product and a synthetic guaranteed investment contract, Zimmerman noted a shift away from some general-account products when market-to-book ratios fell below 100%. Sotell said the concern in general accounts is how to handle a plan-level exit when the market-to-book ratio is under 100%—potentially forcing payouts below par or over multiple years. By contrast, many synthetic stable value funds structured as collective investment trusts provide for par payouts over 12 months in plan-initiated exits during down markets. Sotell also warned sponsors to watch for preferential pricing on proprietary general-account products and the potential cost impact if the plan later changes recordkeepers.
McCaffery added that some sponsors prefer the explicit expense ratios associated with synthetic structures to the net-spread design inherent in general-account products. He also noted the appeal of diversifying wrap-provider exposure within synthetic funds.
Where sponsors are adding stable value: managed solutions and plan design
Historically a stand-alone option, stable value has more recently been incorporated into some custom target-date series. Zimmerman now sees managers using stable value as a substitute for portions of core fixed income within target-date funds and managed accounts, aiming for similar long-term returns with lower volatility. “When you look at different registered investment advisors and firms … it could be as high as an 80% allocation to stable value within the core fixed-income sleeve,” he said.
“Alternatives” and private assets
Trustees, sponsors, and asset managers are asking more about private assets in target-date funds or even in stable value portfolios, the panelists said, but including them would introduce liquidity, custody, benchmarking, and operational hurdles. McCaffery said the broader retirement industry seems to view managed accounts as the most viable place for private-asset exposure. For stable value specifically, he said interest tends to come from larger, investment-savvy sponsors using separate accounts.
Zimmerman noted that some managers are proposing sleeves of private assets to differentiate their stable value strategies and said it can make sense, given the asset class’s long-term nature—provided the risks are acceptable and the sponsor is aligned.
McCaffery added that if private assets make their way into stable value portfolios, there will likely be periods of underperformance versus off-the-shelf competitors, which will raise questions about the right path forward. “It’s one of those scenarios where the first one through the door gets the cobwebs,” he quipped.
Why some sponsors still pass on stable value
Where sponsors decline to use stable value today, panelists said it’s typically for one of four reasons: (1) recent money market outperformance, (2) an ultra-conservative view of capital preservation, (3) the perceived complexity of wraps, competing-fund rules, and discontinuance provisions, and (4) portability concerns during vendor changes or corporate events. Even so, Zimmerman characterized the broader trend as heightened due diligence rather than abandonment.
“We’re not seeing plan sponsors move away from the asset class,” he said. “Today is really more about how they navigate the market environment in terms of how rates have moved and what’s available to them given their size.”