Exploring the Value of Custom Models in DC Plans

Target date funds continue to soar in popularity for plan sponsors and participants alike in defined contribution (DC) plans. Plan sponsors like them because they are simple in theory, an easy concept to communicate to employees, offer participants potential for diversification and possibly can be designated as the qualified default investment alternative (QDIA). Participants favor them because they are a one-step investment option with professional management features.

What may not be as well known is that one of the fastest growing types of TDFs is the custom target date fund. In 2013, the DOL issued informal guidance directing plan fiduciaries evaluating TDFs to consider whether custom target date funds are appropriate for their plans. As plan sponsors review their investment plan lineup from a fiduciary perspective, they may want to consider using custom models for greater flexibility, control, and better alignment with plan and participant needs. As an advisor, you can help your plan sponsor clients understand the potential benefits of custom target date funds.

Collateral Name Audience/ Material Format
“Customizing Target Date Funds—It’s Easier Than You Think”

This guide provides practical steps on the implementation of semi-custom TDFs. It breaks down the roles and responsibilities of the Recordkeeper, Advisor and Plan Sponsor. Included is a discussion of how to determine a suitable glide path and investment committee considerations. A five-step process/checklist is included.
Advisor/ Brochure
“What Plan Sponsors Should Know About Custom Target Date Funds”

This roundtable discussion from a panel of Retirement Plan Advisors and Experts provides advisors and plan sponsors with practical advice on the use and implementation of semi-custom target date funds.
Plan Sponsor/ Brochure
“Considering the Value of Custom Models”

Many plan sponsors offer target date funds in their plan menu, but for greater flexibility and control they may want to consider using custom target date funds (TDFs) instead. This brochure takes a look at the growing trends and how custom models may be a better fit for retirement plans.
Advisor/ Brochure
“Fiduciary Considerations Using Custom Models in DC Plans”

As adoption of target date funds increases, DC plan sponsors should be aware of the fiduciary concerns and best practices associated with implementing them in their plan. This white paper addresses the requirements for ERISA fiduciaries to evaluate and monitor TDFs and to consider whether custom TDFs might be a more appropriate choice to meet plan specific needs.
Advisor/ Brochure