Retirement Plan Investment Design


Ultimately the value a retirement plan advisor brings to plan clients can be measured in plan outcomes and participant readiness for retirement.  Offering meaningful processes for investment selection and monitoring, benchmarking vendor services and fees, and supporting plan fiduciaries are now just table stakes.   Advisors who cannot offer independent processes for supporting plan clients in these areas will not be competitive, especially on larger plans.

The most successful advisors going forward will deliver these core services, but also focus on impacting bottom-line participant outcomes by effectively consulting with sponsor clients on plan design and investment design.  In prior articles, we have discussed “Which embraces behavioral economics by building in automatic features that force employees to take action to opt out of contributing to their 401(k) rather than opt in. Participants are steered onto a path of saving for their retirement but still have the freedom to make their own choices.

Effective “retirement plan investment design” also embraces behavioral economics in determining which asset classes and fund strategies to include in a plan lineup.  Rather than a typical “every-style-box-is-covered” approach (which can lead to participant choice overload), a carefully constructed investment menu can help participants maximize their retirement income potential.  And, unlike auto features, investment design can benefit participants with little or no incremental cost to the participants or the plan sponsor.

In a recent article entitled Mission of Retirement Plan Investment Design: 
“One Small Step” for the Plan Sponsor, “One Giant Leap” for Plan Participants, Jeff Elvander, Chief Investment Officer for RPAG and NFP Retirement, suggests the “5…4…3…2…1…liftoff!” approach to investment portfolio design.  This approach is as simple as it sounds: five target date funds (TDFs) by vintage per glidepath, four U.S. equity funds, three index funds, two fixed income funds and one international fund.  By taking the “small step” of effective investment design, advisors and plan sponsors help participants take a “giant leap” toward meeting their retirement goals.

To receive a copy of this article or discuss how RPAG might help you support plan clients and scale your retirement plan business, please email or call 707-861-9272.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Kestra IS and Kestra AS are not affiliated with any entity listed on this document.

This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects.  It is not intended to provide specific legal, tax or other professional advice.