Target-date funds may certainly be increasing in popularity, but the tools to help financial advisers sort through the available choices are sorely lacking. That was the finding of a recent poll of 168 advisers to defined contribution plans, conducted by Harris Interactive for JPMorgan Funds.

Plan sponsors need better tools to evaluate target-date funds, according to 75% of the financial advisers surveyed. Another 76% said they believe that sponsors only sometimes, rarely or even never are able to ascertain the difference between the glide paths of one target-date fund and another. This is making it very time-consuming for 401(k) advisers to work with sponsors interested in target-date funds, respondents said.

The two biggest mistakes that sponsors make are, first, focusing too much on fees, and, second, merely accepting the target-date fund recommendation of their recordkeeper.

“Considering the dramatic differences between target-date funds and their status as a critical retirement savings tool, it is clearly important for plan sponsors to understand and consider all criteria when choosing a fund,” said JPMorgan Funds Managing Director David Musto.


Besides asking adviser about target-date funds, JPMorgan asked about other 401(k) plan considerations, and found that 76% believe diversification is key. Another 67% said it is extremely important to manage volatility in the five to 10 years before retirement. Sixty-one percent reported that their sponsors are concerned about income-replacement alternatives for their employees.

JPMorgan Funds offers a target-date fund tool that helps advisers and sponsors assess funds’ investment compositions and glide paths.

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