Part of Thornburg’s library of adviser resources, the QDIA Blue Book is useful for plan advisers in supporting their retirement plan clients as they assess a broad array of qualified default investment alternatives (QDIAs)—both off-the-shelf target-date funds (TDFs) and open-architecture custom solutions.
The growing volume of plan assets invested in default investments, particularly target-date funds, has made selecting a QDIA one of the most important responsibilities faced by plan fiduciaries, according to Rocco DiBruno, managing director at Thornburg and director of the firm’s retirement group.
DiBruno says the guide’s range of investment vehicles, including multi-manager custom solutions, distinguishes it from other QDIA evaluation tools. The growing adoption of custom solutions and the Department of Labor’s (DOL’s) directive to take custom solutions into consideration made these critera a critical variable the firm’s selection process, he said in a statement.
The QDIA Blue Book uses a patented methodology that factors in a plan’s investment priorities and participant demographics. Answers provided by plan fiduciaries to a simple maximum difference scaling (MaxDiff) questionnaire determine the relative importance of 13 criteria that are combined with demographic data to evaluate the suitability of selected QDIA options.
The book helps retirement plan advisers quantify performance, risk and organization criteria while identifying the most suitable target-date or risk-based solution for each plan, based on the plan’s priorities and participant demographics. It also helps plan sponsors manage fiduciary responsibility in selecting and monitoring the plan’s QDIA.
“Plan fiduciaries look to their advisers for leadership in presenting a methodology for evaluating QDIAs, and helping them create reports and other documentation to demonstrate compliance with this important fiduciary duty,” DiBruno said.
The Blue Book was developed by Bdellium Inc., which provides retirement decision support tools that improve retirement outcomes.
Thornburg Investment Management is a privately owned global investment firm in Santa Fe, New Mexico.
More information about the QDIA Blue Book is on Thornburg’s website.