New Fiduciary ‘Tips’ Create Opportunities for Retirement Plan Advisors

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De-Risking Target-Date Funds: Balance Growth With Safety

A key question with all target-date funds is, Where do they end? Are they still invested in equities? If so, they fail the two crucial objectives and jeopardize your clients' retirement.

What Target-Date Funds Can and Can't Do

Target-date funds have been touted as the panacea for all sorts of retirement savings ills. While they can deliver accumulated savings plus inflation at the target date, they can't guarantee returns or income, overcome longevity risk, or make up for inadequate savings, among other things. Make sure your clients are getting into these investments for the right reasons.

The Big Flaw in Target-Date Funds

Target-date funds are supposed to manage clients' retirement or college savings based on their changing risk tolerance as they age. Unfortunately, current target-date funds are designed for death, not distribution, leaving the account too exposed to risk at the target date. Careful due diligence is needed.