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Schwab: Target-Date Funds Taking Over Employee Retirement Plans

Target-date funds are taking over 401(K) plans as employers increasingly make them the default option in retirement plans.

Target-date funds are taking over 401(K) plans as employers increasingly make them the default option in retirement plans, said Jake Gilliam, Sr. Portfolio Manager for Charles Schwab Investment Management. Gilliam added that making target-date funds the default choice forces employees to be diversified when they may otherwise ignore their accounts. He said fees are generally low for target-date funds, especially for the professional management investors are receiving, and the increased competition in the industry is pushing fees down further. Finally, Gilliam said Schwab offers open architecture target-date funds for both the retail and retirement plan markets.

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