“Basket” Case

Helping you make a choice
 
Surveys and anecdotal evidence confirm what we all know—the hardest retirement-planning decision for most participants is picking the right investment funds. Recent studies indicate that this struggle may result in a deferral of the retirement saving decision and, in fact, may be leading some to postpone it indefinitely.
 
Even if they do make a choice, we all know that participants rarely rebalance those investments once made.
 
A newly reinvigorated option for this difficult choice is pre-mixed asset-allocation offerings that frequently are dubbed "lifestyle" funds. Properly positioned, these offerings can make a valuable addition to any retirement plan investment menu. With a modest investment of time, and the most basic cognizance of a retirement time frame, these offerings truly can offer participants an easy way to achieve a professional asset allocation of their balances—a true one-stop shop.
 
There are some down sides, of course—fees bear watching, for instance. Some providers construct their lifestyle offerings only with their own proprietary funds. Additionally, some studies have indicated that participants can be confused by these options—mistaking them for yet another fund on the lengthy menu, rather than a choice that removes the need to consider the remaining investment choices of the plan.
 
Regardless, clear, consistent communications are an invaluable means of ensuring that these choices are used properly. This month's Know How is designed to assist in that communication. As always, we appreciate your thoughts and look forward to your feedback. 

PLANSPONSOR staff
editors@plansponsor.com