DC plans want split between record keepers, TDFs
More defined contribution plans are looking to move away from target-date suites operated by their record keepers. Among the 114 plans surveyed by Callan, only 15.8% said they plan to offer target-date funds managed by their record keepers, down from 21.4% that made the move in 2019.
The line for those looking to keep their target-date offerings with their record keeper or not appears to be drawn between the use of commingled investment trusts and mutual funds. More plans are looking to opt for non-record-keeper TDFs this year, while a smaller proportion of plans are choosing the opposite. Record keepers typically offer bundled pricing to plans keeping assets in-house.
Custom target-date options gained more interest on 2020 agendas, with 21.1% of plans saying they were moving that way, up from the 17.3% that did in 2019.
Additionally, 93% of the plans surveyed offered target-date funds. About 37% said their target-date funds were passively managed, with 23.4% actively managed and the balance a mix of the two.