PLANADVISER - November/December 2017 - 45

and how much they spend-make
progress. The study found that people
provided with a mobile app offering
this personal finance information
checked it every two days; many used
it
in the morning before they made
daily purchases. Spending went down
by 15.7%, he said.
He shared some tips for using technology
to nudge people to save more.
For one, if people read fast, they fail
to take in all the information. Using
digital tricks to slow down reading
speed, such as setting off the text via
ugly fonts or shadows, will get people
to understand and remember what
they read, he said.
Measuring TDF Performance
Including the moderator, the panel that
discussed measuring target-date fund
(TDF) performance featured a team of
five retirement plan industry veterans:
Brooks Herman, vice president, data
and research, Strategic Insight; Todd
Lacey, chief business development
officer, Stadion Money Management;
Todd Leszczynski, managing director,
MFS; Joe Szalay, vice president for
defined contribution (DC) investment
strategy, BlackRock; and Derek Young,
head of investment client strategy, vice
chairman, Fidelity Institutional Asset
Management.
As the panel laid out, passive strategies
now account for 42% of the entire
TDF market, compared with 27% in
2009. This shift is mainly occurring
among large and jumbo plans looking
to reduce fees, but it also can be seen
in the midsize and smaller DC plan
markets. The panelists voiced some
concern about this fast growth and
questioned whether plan sponsors
understand what could happen to
passive TDFs during a sharp market
downturn.
Alongside the trend toward passive
management, the use of collective
investment trusts (CITs) as a means
of target-date investing continues to
grow, with 52% of net TDF assets now
invested through this type of vehicle.
There is also some emerging evidence
that the use of exchange-traded funds
FROM LEFT: Todd Lacey, chief business development officer, Stadion
Money Management; Todd Leszczynski, managing director, MFS;
Joe Szalay, vice president, defined contribution investment
strategy, BlackRock; Derek L. Young, head of investment client
strategy, vice chairman, Fidelity Institutional Asset Management;
Brooks Herman, vice president, data and research, Strategic Insight.
Audience Poll
As a plan adviser, how do you handle a plan's
investment lineup?
l Handle all research and investment decisions
myself (or with my team) 33.9%
l Utilize my firm's centralized due diligence
research to narrow fund choices, then select the
underlying funds myself (or with my team) 33.9%
l A combination of the above choices 19.6%
l Outsource all investment decisions to a 3(38)
investment fiduciary 12.5%
as the basis for target-date portfolios
is increasing, though far more slowly
than that of CITs.
The panelists all agreed that, while
TDFs are known for their simplicity of
use, this is something of a mischaracterization.
It is true that TDFs are
relatively easy to work with from the
participant perspective, but there is a
significant amount of preliminary and
ongoing analysis required of the plan
sponsor and the adviser to ensure the
appropriate TDF strategy is put in
place. Some of the panelists seemed
to favor the approach of providing a
given plan population with multiple
glide paths within the same targetdate
product family to a given plan
population, while others were more
comfortable with the idea of finding
a single, middle-ground glide path for
a plan population. In either case, the
panelists agreed that the adviser has
a crucial role to play in helping sponsors
identify, consider and ultimately
select the best TDF approach for their
plan.
The panelists essentially agreed,
the only trend that might slow the
growth in TDFs would be growth in
managed accounts. They stressed
that there is an emerging conversation
about pairing the two investment
approaches together on the plan
menu. -Lee Barney, John Manganaro and
Rebecca Moore
planadviser.com november-december 2017 | 45
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PLANADVISER - November/December 2017

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