Fiduciary Update – The SEC and Target Date Branding


As discussed at our recent fiduciary luncheon events, the regulatory agencies are continuing to look at target date funds.  Last week, the commissioners at the SEC approved new regulations regarding the marketing of target date funds. The agency wants to require the use of a visual aid illustrating the funds glide path, which outlines how the funds allocation changes as it reaches the specified retirement date.  In addition, target date funds will be required to provide a statement of the funds asset allocation at the landing point/retirement date. There will also be new disclosure statements outlining the fund’s lack of a guaranteed return, that allocations may change and that participants should not select a fund based solely on their age or retirement date. Mary Schapiro, chairperson of the SEC, stated that “these proposed rule changes would help clarify the meaning of the date in a target date fund and improve the information provided when these funds are advertised and marketed to investors.”

As you can see, target date funds are continuing to make the news and are facing increased scrutiny from the regulators. In addition to the SEC announcement, the Department of Labor recently issued a statement suggesting that plan sponsors should perform the same due diligence when evaluating and selecting these funds as they do with other investments in their plan. 

If you have any questions or concerns regarding the target date funds in your plan, feel free to give us a call.

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