A funny thing happened on the way to researching the article "The Big 401k Fiduciary Question: Target Date or Target Risk?"
I'd expected the usual complaints about target date funds, but, in the end, I also expected the financial professionals I interviewed to overwhelmingly endorse the use of TDFs. After all, as a group, who's more responsible for the success of TDFs than the financial service industry, the crowd responsible for so enthusiastically recommended them to 401(k) plan sponsors?
Not only was there a lack of consensus regarding preference, but I'd say there was, at most, an even split, if not a slight edge in favor of target risk funds. This got me wondering: Why would practitioners prefer TRFs when the "easy" choice would be to use the most popular flavor? Its clear TDFs present problems for investors (e.g., no consensus on what the "date" refers to and managing to a risk based on age rather than individual need, to name just two).
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Christopher Carosa
Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He’s written seven books, including From Cradle to Retire: The Child IRA; Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal FiduciaryNews.com and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A “parallel” entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook (https://www.facebook.com/christophercarosa/)and Twitter (https://twitter.com/ChrisCarosa).
