The Center for Due Diligence, an independent information and strategic service firm serving the retirement plans advisory industry, has announced a new association designed to help with asset allocation in what is seen as a very mature business.
As noted by Phil Chiricotti, president of CFDD, with more than a trillion dollars held in investment vehicles and the continued growth of target-date funds as the consolidated category for DC plan assets, more focus is needed on TDFs – as due diligence is seriously lacking and evaluation standards have not been developed.
CFDD has responded by launching the Custom QDIA Association, which will be open to individual retirement advisors (each individual will also be provided with two complimentary plan sponsor memberships), as well as plan sponsors, RIAs, broker-dealers, recordkeepers, consultants, TPAs and TDF providers themselves.
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CFDD's new association aims to enhance TDF analysis tools, develop standards for the evaluation of TDFs, as well as working to identify, evaluate and develop standards for the evaluation of custom solutions.
The association will provide its members with data feeds, TDF screens, performance reporting, enhanced CIT reporting and custom solutions workshops.
"Target-date fund objectives are blurred and the majority of these funds are too risky – risk is being used to offset inadequate savings," Chiricotti said. "Low cost does not mean low risk and asset allocation is far different than risk allocation. The majority of today's TDFs also lack risk diversification, inflation hedging and downside protection."
As a result, custom solutions offer advisors the opportunity to differentiate, add value and enhance margins, and service providers will also benefit from the growth in custom solutions, Chiricotti added.
First-year membership fees for those interested in participating in the Custom QDIA Association will be waived for individual advisors attending the CFDD's advisor conference in October. Registration details are available here.
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