New whitepaper guides retirement plan advisors on DOL’s increased
NEEDHAM, Mass.–(BUSINESS WIRE)–Retirement plan advisors and sponsors face vastly increased
responsibilities today in the handling of their 401(k) target date fund
(TDF) offerings. With increasing market uncertainty and the Department
of Labor’s (DOL) highly publicized 2016 ‘fiduciary rule,’ these popular
and important funds demand much greater involvement and oversight to
meet the heightened complexity and rigor of new DOL compliance standards.
Beaumont Capital Management (BCM), a leading provider of tactical
ETF-based investment solutions, explains in its new whitepaper, Questions
a Fiduciary must be able to answer about their Target Date Funds,
some of the specifics of the DOL’s new rules and responsibilities for
fiduciaries and offers guidance in successfully fulfilling them.
“The target date fund is one of the most commonly utilized offerings in
401(k) plans, and for good reason. For the participant, they are a
straightforward way to start investing for retirement,” said Dave
Haviland, BCM’s Managing Partner and Portfolio Manager, and author of
the new whitepaper. “However, since the failures of many
first-generation TDFs, including their performance in the 2008 market
downturn, the DOL has a close watch on this class of funds. TDFs can no
longer live in a ‘set-it-and-forget-it’ era, and the DOL has taken steps
to assure that plan fiduciaries know exactly what they are providing in
their TDFs and that they are serving the best interests of plan
There are five responsibilities that all retirement plan professionals
now must follow on a plan by plan basis. In the whitepaper, BCM outlined
these responsibilities along with supporting details and questions to
guide plan advisors and sponsors. The points below will further be
explored in a webinar hosted by Dave Haviland on Tuesday,
Oct. 11th at 4 p.m. and Monday,
Oct. 17th at 11 a.m.
1. Create an objective and documented process for comparing,
selecting, reviewing TDFs
One size no longer fits all – the DOL is especially wary of offering
only one bundled family of funds.
2. Understand the funds’ investment mix, strategies and risks
and how they change over time
Equity ownership across TDFs can vary as much as nearly 50%, from 35%
to 85% in some cases.
Not all bonds in TDFs are the same and many are not the more
conservative position typically sought to balance portfolio risk.
3. Determine that base expenses are appropriate for the
- What do participants truly want for fund service and management?
Are participants willing to trade lowest available fees for the
potential of indexed funds “going over cliff” with a failing market?
Or do they expect the TDF manager to actively try to protect their
4. Establish if the TDFs are designed to avoid large losses
- Can your plan’s TDFs get defensive during market failures?
In 2008, the three largest 2010 TDFs lost between 21-27%. Those major
losses changed the lives and plans of those about to start their
retirements in ways that no one wants to see happen again.
5. Create effective participant communications – no longer
just a goal, it is required
Are you empowering participants with appropriate information from the
very beginning of your relationship?
“We strongly support the DOL’s actions and believe that all retirement
plan professionals must be fully aware of their increased fiduciary
responsibilities,” said Haviland. “Target date funds will continue to be
a popular option, often accounting for as much as ¾ of the plan assets,
but participants must have the confidence and assurance that they are
being well guided and fully informed in their investment
For more information on Beaumont Capital Management’s new whitepaper,
please contact Jim Walker at firstname.lastname@example.org
or (781) 444-5478.
About Beaumont Capital Management (BCM)
Management provides tactical, growth strategies to advisors,
institutions and retirement plan providers. BCM’s rules-based,
defensive-oriented investment solutions seek to provide growth while
avoiding large bear market losses. The firm’s tactical, ETF-based
portfolios offer cost-effective, active management for virtually any
investor, and the TDFs are DALBAR certified. Created in 2009, Beaumont
Capital Management is a separate division of Beaumont Financial
Partners, which traces its history to 1981. Beaumont as a firm has
approximately $3.8 billion in AUM & AUA as of 6/30/16. For more
information, visit www.investbcm.com.
Jim Walker, 781-444-5478