Target date funds and managed accounts are complementary approaches to addressing retirement readiness for defined contribution (DC) plan participants who want a professionally managed solution. Increasingly, plan sponsors are including both managed accounts and target date funds in their DC plans. Plan sponsors can find themselves in the uncomfortable position of having done extensive due diligence on their target date fund’s glide path, methodology, and underlying assumptions, only to find that their managed account provider’s approach is different in some or all of these areas.
This Russell Investments Viewpoint outlines the following four areas plan sponsors should be aware of as they establish greater consistency between target date funds’ and managed accounts’ approaches:
- Methodology for generating the investment advice
- Asset classes used in portfolio construction
- Ongoing monitoring and reporting