Voya 2013 Annual Report Download - page 28

retirement. Our product pricing models take into account many additional factors as applicable, including, among
other things capital requirements, hedging costs and operating expenses.
Our custodial mutual fund account is a fee-based, recordkeeping product, for which the recordkeeping fees,
combined with estimated mutual fund revenue sharing, are priced to cover acquisition and operating costs over
the life of the account. These custodial mutual fund products do not generate investment margins, do not expose
us to significant mortality risk and no hedging is required.
Investment Management
We offer domestic and international fixed income, equity, multi-asset and alternatives products and
solutions across market sectors, investment styles and capitalization spectrums through our actively managed,
full-service investment management business. Multiple investment platforms are backed by a fully integrated
business support infrastructure that lowers expense and creates operating efficiencies and business leverage and
scalability at low marginal cost. As of December 31, 2013, our Investment Management business managed
$75.2 billion for third-party institutions and individual investors, $45.1 billion in separate account assets for our
Retirement Solutions and Insurance Solutions businesses and our Closed Block segments and $79.0 billion in
general account assets.
We are committed to investing responsibly and delivering research-driven, risk-adjusted, client-oriented
investment strategies and solutions and advisory services across asset classes, geographies and investment styles.
We serve a variety of institutional clients, including public, corporate and Taft-Hartley Act defined-benefit and
defined-contribution retirement plans, endowments and foundations, and insurance companies through our
institutional distribution channel and through affiliates. We also serve individual investors by offering our mutual
funds and separately managed accounts through an intermediary-focused distribution platform or through
affiliate and third-party retirement platforms.
Investment Management’s primary source of revenue is management fees collected on the assets we
manage. These fees typically are based upon a percentage of AUM. In certain investment management fee
arrangements, we may also receive performance-based incentive fees when the return on AUM exceeds certain
benchmark returns or other performance targets. In addition, and to a lesser extent, Investment Management
collects administrative fees on outside managed assets that are administered by our mutual fund platform, and
distributed primarily by our Retirement Solutions business. Investment Management also receives fees as the
exclusive investment manager of our general account, which is managed on an arm’s-length pricing basis.
Investment Management generated operating earnings before income taxes of $178.1 million for the year ended
December 31, 2013.
We are driving Investment Management profitability by leveraging continued strong investment
performance across all asset classes to accelerate growth in AUM (through both greater sales and lower
redemptions) and taking advantage of a rebuilt sales force to increase productivity levels. We are also increasing
scale in our primary capabilities and our share of proprietary funds in affiliate products, principally through
leveraging our access to approximately 47,000 defined contribution plan sponsors and more than 5 million plan
participants through our U.S. Retirement business as of December 31, 2013. Historically our proprietary share of
AUM has been materially less than the industry average; in addition, we have lacked access to the majority of
our retirement plan customers due to sponsor restrictions. We are focused on improving coordination between
our Investment Management and Retirement Solutions businesses to capitalize on Retirement Solutions’ leading
market position and Investment Management’s broad investment capabilities and strong investment track
records. To that end we have established dedicated retirement resources within our Investment Management
intermediary-focused distribution team to work with Retirement Solutions and have enhanced our Multi-Asset
Strategies and Solutions investment platform (described below) to increase focus on retirement products such as
our target date and target risk portfolios, which we believe will capture an increased proportion of retirement
flows going forward.
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