The governing board of the Federal Thrift Savings Plan, Washington, has given plan executives the go-ahead to explore adding a self-directed brokerage account for mutual funds to the plan’s investment menu.
No timetable has been established, Kim Weaver, a spokeswoman for the Federal Retirement Thrift Investment Board, said in an e-mail.
The board’s endorsement, made at Monday’s meeting, didn’t describe the numbers or types of mutual funds that would be included in the brokerage window. The timetable and product offerings “will have to be determined after we issue a request for proposal,” Ms. Weaver wrote.
The $455 billion Federal Thrift Savings Plan, which covers 4.7 million participants, offers five core funds and a lifecycle fund that invests in the five funds based on professionally determined asset allocations.
“As appropriate, the board members will continue to review issues related to the implementation of the mutual fund window,” Ms. Weaver wrote. “The deployment of the mutual fund window is dependent upon other initiatives that the (board) has underway, several of which are multiyear projects, and which must be completed before the mutual fund window can be launched.”
In a memo to board members, Greg Long, executive director, pointed out that his staff has spent two years studying the mutual fund window assessing costs and operational requirements. The staff research also reviewed the potential of the mutual fund window “to improve account retention,” he wrote.
A December 2013 online survey of plan participants showed 36% strongly agreed or agreed with the statement that the plan would be better with a brokerage window, his memo said. Also, 29% strongly agreed or agreed with the statement that they would transfer some of their account to a mutual fund window.
“While our research revealed the benefit (of the mutual fund window), we still needed to explore the fiduciary considerations with offering a window,” the memo said.
