Most retirement plans still default savers into a single factor target date fund based on nothing more than their age, and Philip Chao, founder and chief investment officer of Experiential Wealth in Cabin John, Maryland, and founder and CEO of Nexus338, says that approach was never built around the person actually in the plan. Nexus338, now has installed a personalized alternative called the Individualized Glide Path Solution, or iGPS, for more than 400 plan sponsors – a sign, he argues, that the industry's one-size-fits-all default is due for an overhaul.
The Pension Protection Act of 2006 created the Qualified Default Investment Alternative to limit fiduciary liability for sponsors who automatically enroll workers into a diversified investment. Since then, target date funds have become the default of choice for nearly every plan that uses one, part of an industry-wide shift toward target date strategies that shows no sign of slowing down, with trillions of dollars now riding on a target date fund's glide path, the preset schedule that shifts a portfolio's mix of assets as retirement nears.
“Within a given plan, everyone in the same five-year age band – regardless of income, contribution rate, or account value – is lumped into the same investment assumptions and the same product under a TDF series,” Chao said. “TDFs are built using national average values, solving for the average participant at retirement. But an average, or mean, is simply the sum of all values divided by the size of the population, and it can be pulled sharply up or down by very high or very low numbers. The reality is that almost no one is truly average.”
Managed accounts already offer a personalized alternative, but Chao said adoption has stayed low because of cost – typically 60 to more than 100 basis points on top of underlying investment expense – combined with a reliance on participant engagement that most workers never provide once they're defaulted into a plan by inertia rather than choice.
Chao said he identified that gap more than a decade ago and built iGPS around three requirements: a cost comparable to a typical target date series, no participant engagement required, and genuine personalization using data plan sponsors already hold, including date of birth, wages, account balance, deferral rate and employer match.
“In 2023, after working tirelessly with PIMCO for two years and a fintech company, we launched iGPS – the first personalized target date solution – at an all-in expense of 29 basis points,” Chao said. “We are now able to capture each participant's changing demographic data – age, wages, account value, deferral contribution, and employer contribution – and adjust the portfolio every quarter and rebalance for timely alignment.”
The strategy now manages more than $350 million across close to 500 plans, accessible through recordkeepers connected to the iJoin platform, a Broadridge company. Nexus338 is also building iGPS Lifetime, which will add a personalized allocation to fixed annuities from Pacific Life for participants age 50 and older.
Chao's focus on personalization extends into his new book, “From Save to Safe: A Personalized Journey from Fragility to Resilience,” which argues that most Americans under save for their retirement and defined contribution plans have concentrated on accumulation while largely ignoring what happens once someone stops contributing.
“Even today, most plans do not allow retired employees to receive monthly distributions; the standard plan design and system permit only a complete rollover or a full distribution as a cash out option in nearly all cases,” Chao said. “Longevity risk is the largest unmanaged risks in retirement. Put simply, most people worry that they will spend down all their assets before they die.”
His recommendation: let retirees who leave assets in the plan take periodic distributions without a steep fee on every payout, paired with institutionally priced, in-plan group annuities that let participants convert part of their savings into guaranteed lifetime income, backed by a managed payout option for the remaining, non-insured assets.
On governance, Chao firmly believes in the vital importance of a retirement plan fiduciary. Upholding the dual duties of loyalty and prudence is not only the requirement under ERISA but it also safeguards trust in the employer based retirement system. Chao shines a light on plan fiduciaries, asking all to regard their fiduciary status as a leadership position to serve and do their best solely in the interests of those who entrust them with their assets.
Written By Chris Davis, Investment News August 20, 2026
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