J.P. Morgan Asset Management has launched a new communications program designed to deliver a simplified explanation of its SmartRetirement series of target date funds. Animation and infographics support the easy-to-understand terminology.
Many participants lack basic knowledge on how target funds work as industry studies found. Key ideas such as what the date in the fund name really means, the fact that the funds are already fully diversified and that target date funds do not provide guaranteed income in retirement.
It is the goal of many firms to provide their participants with more information.
To fix this gap in understanding, many firms want to provide more information to participants. However, J.P. Morgan's recent research shows that three-quarters or 75% of participants say they don’t take the time to read all of the investment information that is currently provided to them. Also, 44% say they are already getting more information than they can absorb. This probably is the reason many participants don’t understand what they are invested in, which includes target date funds.
J.P Morgan’s goal was to address the knowledge gap as well as the communication approach with its new program by making it available to all J.P Morgan SmartRetirement clients regardless of the recordkeeper servicing their plan.
“Research has shown that while defined contribution plan participants want access to target date funds for retirement savings, they do not understand some of the most basic components of how target date funds work,” said Catherine Peterson, Director of Retirement Insights at J.P. Morgan Asset Management in a statement. “Given the growing importance of target date funds in plans, we developed this program to specifically address identified participant knowledge gaps.”
