NEW YORK, July 27, 2015 /PRNewswire/ -- J.P. Morgan
Asset Management today released its latest Retirement Insights
paper outlining best practices for selecting a target date strategy
for defined contribution plans (DC). The white paper, "Custom or
off-the-shelf target date strategies?," explores several factors –
such as asset allocation, management selection and fee structure –
that DC plan sponsors and financial advisors should carefully
consider when deciding whether a custom or "off-the-shelf" target
date strategy is most appropriate for their plan. Key findings
include:
- Choosing between custom or off-the-shelf target date strategies
requires extensive analysis. Plan sponsors and financial advisors
need to balance the benefits that custom strategies might offer
with the required expertise, time and costs, which can be
significant.
- Custom target date strategies can be precisely designed to meet
specific plan requirements. These strategies can take into account
employee demographics and particular plan design features (for
example, a prohibition against plan loans or pre-retirement
withdrawals).
- In a custom strategy, a plan sponsor can consolidate investment
managers from defined benefit plans to potentially achieve
economies of scale and realize savings on overall fees. But a
substantial asset base (greater than $500
million) may be needed to secure those savings. Smaller
plans will likely be better served by an off-the-shelf target date
strategy.
- Effective communications are critical when implementing a
custom strategy. While participants in an off-the-shelf target date
strategy can access relevant information about their strategy's
funds on fund company websites, participants in a custom strategy
may have only one source of information about their retirement
funds: the communications they receive from their plan
sponsor.
"Target date strategies continue to hold a growing share of DC
plan assets and, like many in the industry, we expect they will
become increasingly popular as both custom and 'off-the-shelf'
strategies allow participants to access powerful asset class
diversification," said Portfolio Manager Dan Oldroyd, Head of Target Date Strategies,
Multi-Asset Solutions, J.P. Morgan Asset Management. "Weighing the
pros and cons of these options should never be a simple exercise.
Plan sponsors and advisors need to be thorough, careful and
thoughtful in their analysis when determining a course of
action."
Please view the full J.P. Morgan Retirement Insights paper,
including the "Is a custom target date strategy right for your
plan?" evaluation worksheet, here.
About J.P. Morgan Asset Management
J.P. Morgan Asset
Management, with assets under management of $1.6 trillion, is a global leader in investment
management. J.P. Morgan Asset Management's clients include
institutions, retail investors and high net worth individuals in
every major market throughout the world. J.P. Morgan Asset
Management offers global investment management in equities, fixed
income, real estate, hedge funds, private equity and
liquidity. JPMorgan Chase & Co. (NYSE: JPM), the parent
company of J.P. Morgan Asset Management, is a leading global asset
management firm with assets of approximately $2.4 trillion and operations in more than 60
countries. Information about JPMorgan Chase & Co. is
available at www.jpmorganchase.com.
J.P. Morgan Asset Management is a leading provider of
comprehensive retirement solutions and is dedicated to improving
individual retirement outcomes. The firm has defined
contribution assets under management of nearly $146 billion, as of March
31, 2015.
J.P. Morgan Asset Management is the marketing name for the asset
management businesses of JPMorgan Chase & Co. and its
affiliates worldwide.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/jp-morgan-retirement-insights-compares-custom-and-off-the-shelf-target-date-strategies-outlines-benefits-and-challenges-for-plan-sponsors-and-financial-advisors-300119024.html
SOURCE J.P. Morgan Asset Management