Sponsors Unaware of Customization Benefits: The majority of midsize and large plan sponsors are failing to leverage their assets to provide more specialized or customized TDFs.
- Low adoption: Only 22% of large plan (those with $250 million or more in assets) sponsors and 21% of midsize plan (those with $1 million to $249 million in assets) sponsors reported that they have adopted customized TDFs.
- Getting it on the radar: 36% of large plan sponsors said they have not adopted customized TDFs because they weren't aware of the benefits of the improved structure.
Healy comments, "We were very surprised to hear plan sponsors say they simply were unaware that changing from an off-the-shelf to a customized structure provides advantages such as better diversification and long-term asset allocation based on participant demographics, as well as long-term cost savings and fiduciary protections for their plan."
Size Matters: The research found that the size of a plan's assets directly impacts sponsors' goals for TDFs.
- Lasting savings: 54% of sponsors of large plans and 43% of sponsors of midsize plans said the goal of their TDF is to ensure that savings last through participants' retirement years - versus only 32% of sponsors of small plans (those with less than $1 million in assets).
- Minimum level of savings: 41% of small plan sponsors said the goal of their TDF is to ensure a minimum acceptable level of savings at retirement.
- Increased participation: 37% of midsize plan sponsors were concerned with improving participation, while only 28% of sponsors of small- or $500 million+ large-size plans were concerned. Small plans have the lowest participation rates (30% or less), while large plans have the highest participation rates (86% or higher).
KEY PLAN PARTICIPANT FINDINGS
TDFs Win High Praise from Sophisticated and Unsophisticated Investors: In the eight years AllianceBernstein has surveyed plan participants, they have consistently fallen into one of two main categories as investors: Active or Accidental.
- 38% of participants surveyed called themselves Active investors - noting that they started saving early, have confidence about their current financial situation and actively manage their investments or the managers that invest for them.
- 62% of participants consider themselves Accidental investors, unenthusiastic about saving and investing, insecure about their current financial situation and lacking confidence in any investment ability.
- TDF usage is at an all-time high: 39% of Actives said they use TDFs (up from 29% in 2009) and 27% of Accidentals said they use them (up from 21% in 2009).
TDF satisfaction for different reasons: 87% of Actives and 72% of Accidentals said they are equally or more satisfied with their TDFs than with other investments in their plans.
- Active investors feel comfortable with their investment choices and their retirement in general with TDFs' asset-allocation options.
- Accidental investors like the simplicity and ease of TDFs.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV