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Reader Poll: More Options Fueling Move From Proprietary TDFs

Proprietary target-date funds are still common on plan menus, but this week’s reader poll finds some notable shifts in that status.

Asked how many of their plan sponsor clients have the record keeper’s proprietary target-date fund offering on their menu, 43% said that a quarter of their clients did, while 28.5% said half did, and 15% said three-quarters did (the rest weren’t sure).

A new survey finds that about 1 in 10 plan sponsors replaced their target date fund/balanced fund manager in 2014, while the proportion of plans that offer their record keeper’s proprietary TDF declined “precipitously.”

Five Years Ago

Compared with five years ago, most respondents to this week’s reader poll (71.5%) said that while it had changed, it had done so gradually. Meanwhile 15% said it was pretty much the same as five years ago, and the rest acknowledged that “’Precipitously’ pretty much sums it up.”

The primary drivers of that change were:


  • 52% — Availability of other options (including custom target-date funds)

  • 34% — Recommendation of advisor (survey respondent)


As one reader noted, “I have a few plans on insurance company chassis that originally only offered proprietary solutions. The platforms have since added another fund company or two giving us some choice. The proprietary funds have not performed and I've made some changes to outside managers.” The rest hadn’t seen evidence of that change.

So, is this a trend — or has it been pretty well played out? Most of this week’s respondents (57%) saw it as a trend, and one that they expected to continue. However, 17% said that while it was a trend, they thought it was pretty well played out. The remaining 28% had seen no evidence of that trend as yet.

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