The Case for Rethinking TDFs as QDIAs

Jacob Adamczyk, AIF®, Associate Vice President at Aurum Advisory Services and Mike McKeown, CFA®, CPA, Director of Research at Aurum Advisory Services. Moderated by Mike Limbacher, Product Development Manager of Tools for fi360.

June 12, 2013

The popularity of target-date funds (TDFs) blossomed when Congress passed the Pension Protection Act of 2006 (PPA), which made a number of changes to ERISA, not the least of which was facilitating automatic enrollment within qualified retirement plans. The Department of Labor (DOL) subsequently issued an advisory opinion defining what investments could qualify as default investment alternatives (QDIAs) within a qualified plan; three types of investments were cited – lifecycle/TDFs, risk-based/balanced funds, and model portfolios – of which TDFs quickly became the most popular choice. Unfortunately, at the time PPA was passed, there was a paucity of regulation regarding the due diligence and monitoring of TDFs. Equally as unfortunate was the timing of the 2008 financial crisis that caused many TDFs, even those with the nearest target date, to post significantly negative returns.

This one-hour webinar features guest presenters Jacob Adamczyk and Mike McKeown of Aurum Advisory Services for a session based on Mr. Adamczyk’s fi360 Article Competition-winning article, Rethinking TDFs as QDIAs: Why Target Date Funds Are a Fiduciary Nightmare for Qualified Plans. Mr. Adamczyk and Mr. McKeown present their take on what fiduciaries should have learned about TDFs by now and how to more appropriately structure default investments for participants.