In regard to the Aug. 18 Pensions & Investments' page 4 story, “Some target-date funds are boosting equities”:
Target-date funds are all about the performance horse race, not participant well-being.
Participants don't choose TDFs. Most assets in TDFs are there by default, so plan sponsors and their advisers choose TDFs. The Department of Labor says it's important that fiduciaries consider demographics in their TDF selection.
The fact is that the key demographic is the lack of financial sophistication on the part of those who default. The naive need protection, especially as they near retirement, and fiduciaries need to execute their duty of care, which is like our duty to protect our young. In other words, safety first, not add on more risk to win the performance horse race. Participant objectives are not in line with provider objectives, and fiduciaries are the only ones who can change that.
RONALD SURZ
President, PPCA Inc and Target Date
Solutions
San Clemente, Calif.
