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Custom TDFs Trending Higher With Advisors

A growing number of DC specialists — financial advisors managing at least $50 million in DC assets — are now recommending customized target-date funds to their plan sponsor clients, according to a new report.

In fact, Cogent Reports notes that this segment’s customized fund recommendations have increased significantly — from 5% in 2015 to 15% in 2016.

Nearly half of DC specialists (46%) continue to advocate using an external manager for target date funds rather than the proprietary TDFs offered by the current plan recordkeeper — something that the report’s authors cite as further evidence that incumbent recordkeepers must continue to up their game in this increasingly competitive marketplace.

The report notes that consideration of TDF providers remains largely based on fees and long-term performance. However, they explain that full-service plan providers and DC investment managers must understand the specific nuances by plan advisor producer and channel to retain and win business.

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