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Tag Archives: proprietary investments

New Year: Improve Your Counterparty Relationships

As 2018 comes to a close, it’s time to think about strategies to make 2019 your best year yet. Solutions that just “got the job done” in the past year do not cut it anymore as firms and industry professionals are looking to innovate and optimize existing processes. If you’re a fund company brainstorming ways to bring your business to the next level in 2019, we have a New Year’s Resolution to add to your list: improve counterparty relationships and communications. Read more

Analytic reports, brokers, financial consulting, fundblast, mutual fund, financial services, data management, counterparty relationships, delta data

Employee Spotlight: Bret Bange and Jason Davenport

Our employee spotlight this week, includes two great men. This year has been one of innovation, achievement, and exciting growth here at Delta Data. Some of our notable accomplishments in 2018 include the launch of new products such as FundBlast and our Proprietary Product Manager, recognition as a TAG Top 40 Innovative Tech company, and a NICSA Nova award win for Innovation in Technology. Read more

President Signs Executive Order on Strengthening Retirement Security

On August 31, 2018, President Trump signed an Executive Order on Strengthening Retirement Security in America. This EO directs the US Department of Labor and the Treasury to consider issuing regulations and guidance that would (1) make it easier for businesses to offer association retirement plans, also known as multiple employment plans (MEP), (2) improve the effectiveness of and reduce costs of furnishing required plan notices and disclosures, to include broader use of electronic delivery, and (3) update life expectancy and distribution period tables for purposes of required minimum distributions. Read more

Learn When to Use Custom TDFs and Why

Custom TDFs are starting to become popular in larger DC plans. But do they make sense for plans with less than $1 billion? According to a report by consultants at Rocaton, the answer is yes, but only in certain circumstances.

Plan sponsors may find it convenient to choose the TDF available on their record keeper’s platform, but would a decision based on convenience (or availability) satisfy their fiduciary responsibility? Furthermore, it seems highly unlikely that one manager can be proficient in all asset categories, yet the vast majority of assets are in proprietary TDFs. So when do custom TDFs make sense?

Rocaton suggests that plans should look at custom TDFs based on demographics and employee behavior only in the most unique circumstances since existing products offer enough choice for most plans. But other factors that are more important include:

  • Use of DIAs or funds on the menu that represent diverse money managers.
  • Desire to use alternative investments.
  • Lower fees.

Morningstar’s Janet Yang says that their analysis shows that fees are the number one predictor of success for TDFs. But what size plans can actually see significant cost savings? Research from Callan indicates that larger plans are quickly adopting custom solutions, with 22.3% offering them in 2014, up from 11.5% in 2013 — largely at the expense of record keepers’ proprietary funds. Traditional wisdom has held that custom TDFs make sense for plans above $1 billion, but Rocaton’s research shows that the threshold could be as low as $250 million — and dropping.

Though plan design and deferral rates are more important indicators of outcomes than TDFs are, advisors who want to add value should be wary of just choosing the record keeper’s proprietary TDFs or selecting funds that only use proprietary investments. There are simple solutions from record keepers out there that allow a plan to use the plan’s current menu of funds employing a third party’s glide path and asset allocation models.