Products January 12, 2011

ExpertPlan Retirement Program Picked for GWN

ExpertPlan, Inc. has been selected by GWN Securities, Inc. to provide a customized defined contribution and defined benefit retirement program to their national network of more than 700 financial advisers.
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Under the program, ExpertPlan will support GWN Securities with internal and field sales support, and provide recordkeeping and administrative services. The fully branded product will feature GWN’s Registered Securities Broker/Dealer investment portfolios, while enabling the firm’s RIA contingency to offer its clients access to ExpertPlan’s open architecture investment platform and full range of retirement products.  

“We are proud to have forged this new relationship with GWN Securities, Inc. and look forward to working with their advisers by helping them construct retirement plans that meet the unique needs of their clients,” noted Ross Brown, Senior Vice President, Sales and Relationship Management. 

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In Practice January 12, 2011

Survey Finds General Understanding of Target-Date Funds

A Vanguard survey finds that most target-date fund investors understand the funds’ basic design and are aware of the accompanying investment risks.
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The survey also revealed that many investors may not entirely understand that a target-date fund in itself is a diversified investment, and feel they have to keep some assets in other investments as well.  Of the participants holding such a “mixed” portfolio, 56% said they did so to hold more aggressive investments, and another 41% thought they needed a mixed portfolio for adequate diversification.

According to a press release, 62% of TDF owners in defined contribution retirement plans reported having “heard of a target-date fund.” A vast majority of the “aware” participant TDF holders understood the fundamental goal and design of the funds, acknowledged that they involve risk, and accurately reported that they offer no guarantees.   

Other key participant findings include: 

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  • 77% knew that the asset allocation becomes more conservative as the target year approaches, showing an understanding of these funds’ changing asset allocation.  
  • 68% recognized that target-date funds offer a diversified mix of stock and bonds.  
  • 87% believed target-date funds involve “some risk” or more; less than 1% felt they were risk-free.  
  • Only 8% of participants incorrectly believed that target-date funds provide “guaranteed income.” Just 4% of participants incorrectly indicated that TDFs provide either a guaranteed return or become risk-free at the target date. 
  • Only 24% of the participants indicated that the funds’ asset allocation will continue to change after the target year. 

The press release said overall awareness of TDFs was substantially higher among IRA owners than among plan participants, regardless of whether the respondent actually owned a fund; 95% of TDF investors in IRA accounts reported having “heard of a target-date fund.” Vanguard suggests this is because IRA owners must actively choose a target-date fund investment, while plan participants are often automatically defaulted into one.  

Seventy-five percent of participants said they intended to gradually draw down their target-date fund assets.   

Vanguard conducted the survey in January 2010 among more than 4,700 respondents, including Vanguard IRA owners and participants in Vanguard-administered defined contribution retirement plans who held target-date funds and a control group of Vanguard IRA investors and plan participants who did not own the funds. 

The survey report can be downloaded here. 
 

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