As Target-date funds (TDFs) become more popular and capture more of the retirement plan market, advisors should understand how to evaluate and recommend individual funds to clients.
The Benefits of TDFs
Understanding these products is worth the effort. TDFs help advisors manage investor risk while maintaining an age-appropriate allocation, limiting exposure to volatility, and promoting growth to meet retirement goals.
Multiple Options
Retirement plan advisors have access to a range of funds to meet their clients’ needs, including off-the shelf products and customizable options.
More Options, More Responsibility
When selecting custom products—including TDFs—advisors should address the heightened regulatory oversight that accompanies these choices.
Seek Transparency
TDFs have complex underlying structures. Advisors need a well-documented and transparent evaluation and selection process to demonstrate their understanding of TDF options to clients, and to show how they have properly assessed their clients’ needs.
