Target Date Suitability
How was your Target Date Series selected? Have you taken a critical look at it since it was installed? Many advisors and plan sponsors do not devote much time evaluating this major asset class. Consider...
- The Center for Due Diligence reports that over 80% of contributions and 34% of plan assets are expected to be invested in Target Date Funds by 2019.
- Extreme differences in down market returns among TDFs with the same retirement date can create significant risks for plan participants and plan fiduciaries.
- The Department of Labor (DOL) published “Target Date Retirement Funds-Tips for ERISA Plan Fiduciaries” in 2013 over concerns that differences in Target Date Fund risk postures were not adequately being investigated by plan sponsors or their advisors.
- Target Date Fund suitability begins with aligning a participant population’s need to take risk with its willingness to assume risk and then compares off-the-shelf and custom model options that match a plan’s “best fit” risk posture
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You May Find These of Interest:
How Many Investment Options Should You Offer
Understanding Fees and Avoiding Fee-Based Litigation
Evaluating Your Target Date Series
Last reviewed 6/1/2022
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