Russell Investments recently announced “Adaptive Retirement Accounts,” which it heralded as the next generation of TDFs. Using data available from record keepers, Russell designs customized portfolios for participants based on age, deferral rates, salary, account balances and DB plans if applicable. They claim that this service meets QDIA requirements.
While TDFs have gained popularity because no input from participants is required, they are crude at best, placing all participants in an age group in the same investment strategies. Risk-based funds require participants to engage and can be based more on emotion than needs. Like LDI, Russell’s Adaptive Retirement Accounts may finally offer a meaningful alternative to TDFs in helping participants reach their retirement goals at a reasonable cost (estimated to be 30-40 BPs or lower, depending on assets). Available only through advisors, the service can use current plan investments.
