Despite the increasing proliferation of target-date funds in employer-sponsored retirement plans, many sponsors aren't very knowledgeable about the funds, Janus found in a survey.
For instance, compared to last year's findings, 50% of plans don't know when the end date of the glide path is, up from 32% in 2009.
More than one-third are not familiar with the "to" or "through" glide path debate, and 35% are not sure what the best qualified default investment alternative is for their employee population.
The survey also found a decreasing enthusiasm for target-date funds, with 34% of respondents saying these are the best qualified default investment alternatives for their plan, down from 57% in 2009.
Additionally, when asked to compare QDIA options based on fees, transparency, overall performance, risk management and correct usage by participants, balanced funds saw gains in each category compared to last year, while target-date funds saw declines.
Findings reveal a disconnect
"Given the industrywide scrutiny on target-date funds, we were surprised at the amount of uncertainty the survey data revealed," says Russ Shipman, senior vice president and managing director of Janus' retirement strategy group, adding that the "findings reveal a disconnect."
He also explains that since the sponsors believe participants understand the funds and use them correctly, that will make up for their own lack of knowledge.
"This confirms an opportunity exists to provide plan sponsors with education about the structures and mechanics of target-date funds," Shipman explains.
Lee Barney is the Editor of Money Management Executive, a SourceMedia publication.
