ICI: Sponsors of target funds need to educate investors better

When it comes to target date funds, ignorance is not bliss.
JUN 18, 2009
When it comes to target date funds, ignorance is not bliss. Sponsors of the funds, therefore, should be required to do more to ensure that investors understand what they are buying, the Investment Company Institute said in a statement it released at a hearing today by the Department of Labor and the Securities and Exchange Commission. Even though the funds “currently do a good job of disclosing the key information that fund investors want and need, we think sponsors of target date funds, whether mutual funds or other products, can and should do more to ensure better investor understanding,” said Karrie McMillan, general counsel at the Washington-based ICI. Lawmakers are reviewing the funds, which could result in new rules for disclosure and standards for asset allocation. Target date funds, designed as a one-stop retirement investment, establish a stock and bond allocation that changes over time and attains a specific mix at retirement. Information about the funds should be displayed in a prominent fashion, the ICI said in the statement. This information should include “the relevance of the target date, including what happens on the target date, the funds’ assumptions about the investor’s withdrawal plans at and after the target date, and the age group for which the fund is designed,” according to the statement.

Latest News

WallStreetBets takes on the SEC — and makes a surprisingly sharp case
WallStreetBets takes on the SEC — and makes a surprisingly sharp case

The Reddit trading community's formal comment letter against the proposal is drawing widespread attention across finance and tech circles.

Stratos Wealth Holdings closes 11 acquisitions in push for advisory scale
Stratos Wealth Holdings closes 11 acquisitions in push for advisory scale

RIA aggregator adds $4.8 billion in client assets across seven states as demand grows for alternatives to traditional succession models.

Beyond wealth management: Why the future of advice is becoming more human
Beyond wealth management: Why the future of advice is becoming more human

As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management

Shareholder sues FS KKR Capital board, alleges NAV and dividend cover-up
Shareholder sues FS KKR Capital board, alleges NAV and dividend cover-up

Shareholder targets FS KKR Capital's directors over alleged portfolio valuation and dividend missteps.

UBS loses $1.2 million arbitration claim linked to variable annuities and margin
UBS loses $1.2 million arbitration claim linked to variable annuities and margin

UBS has a history of costly litigation stemming from the sale of volatile investment products.

SPONSORED Beyond wealth management: Why the future of advice is becoming more human

As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management

SPONSORED Durability over scale: What actually defines a great advisory firm

Growth may get the headlines, but in my experience, longevity is earned through structure, culture, and discipline