NAPA Net - Polling Places 051421

Are Target-Date Funds Off-Target?

The Chairpersons of two of the leading retirement plan committees in Congress called for a review of target-date funds, questioning both the asset allocation of those funds at retirement, and the composition of asset classes in the funds overall. It’s time for YOU to weigh in.

Specifically, Sen. Patty Murray (D-WA), Chair of the Senate Committee on Health, Education, Labor & Pensions, and Rep. Robert Scott (D-VA), Chairman of the House Committee on Education & Labor, have written to the head of the Government Accountability Office (GAO), asking them to conduct a review of target-date funds (TDFs).

In addition to expressing concerns about the amount of equity investment in 2020 target-date funds, the letter also calls out moves made by the Department of Labor under the Trump Administration which they say “paved the way for the use of potentially higher risk and more lightly-regulated “alternative” assets, such as private equity”. The letter goes on to note that “Little is known about the extent to which TDFs offered in employer-provided retirement plans include alternative assets and how those TDFs with alternative assets impact participants’ fees and returns”.

What do you think?

Question Title

* 1. Generally speaking, do you recommend target-date funds with a "to" or "through" retirement date glidepath?

Through retirement

To retirement

Both to and through retirement, depending on the particular plan.

No idea.

Whichever is offered by the provider of choice.

Any comments?

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* 2. Among the target-date fund families you work with, generally speaking, what's the asset allocation of the 2020 fund?

70/30 stocks/bonds

60/40 stocks/bonds

50/50 stocks/bonds

40/60 stocks/bonds

30/70 stocks/bonds

20/80 stocks/bonds

10/90 stocks/bonds

0/100 stocks/bonds

Not sure

Any comments?

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* 3. To what extent do the target-date funds you recommend include alternative assets, such as hedge funds or private equity?

They all do.

Many of them do.

Some of them do.

A few do.

None do.

I'm not really sure.

Any comments?

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* 4. What do you expect to come out of the GAO report?

Nothing good.

A greater awareness of the importance and prevalence of target-date funds.

A greater appreciation for the complexity and contribution of target-date funds.

A discussion about the difference in philosophy between "to" and "through" target date glidepath philosophies.

No earthly idea.

Condemnation that participants don't really understand target-date funds, even though most participants really don't WANT to understand target-date funds.

Something else?

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* 5. Other comments about TDFs, the prevalence of TDFs, the complexity of TDFs, the interest in TDFs, the concerns of the Congress in this subject, the lack of concerns by Congress in this subject, what participants know about TDFs, what participants don't know about TDFs, what participants don't want to know about TDFs, what plan fiduciaries don't know about TDFs, glidepaths, or the cost/composition of TDFs, , or life in general?

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* 6. What is your role working with retirement plans?

Advisor

Provider

TPA

Plan sponsor

Recordkeeper

Wholesaler

Consultant

Other (please specify)

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* 7. What size plans do you work with PRIMARILY?

Under $10 million in assets

$10-$20 million

$20-$50 million

$50-100 million

$100 million - $250 million

$250 million - $500 million

Above $500 million

Other (please specify)

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* 8. Suggestions for future survey questions? Seriously - what would you like to know about/from your fellow NAPA-Net readers? Or what would you like to be asked?

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* 9. All responses are confidential, of course - but just in case you would like a response - or want me to know you responded - or just want to say hi - here's your chance to do so (don't forget your email)!