PLANSPONSOR - April - May 2022 - 10

UPFRONT
How to Streamline the Investment Menu
PLAN sponsors can help participants
with investment decisions by ditching
duplicate funds, simplifying their choices
through layering, and white labeling
investments, experts say.
While many participants are defaulted
into a target-date fund, there is still a cohort
of those who prefer to choose their own
asset-allocation mix.
" An easy, yet effective way to simplify
the investment choices is for a plan sponsor
to ensure that it's offering enough investments
to allow participants to diversify and
have different selections across different
categories, " says Adam Rivett, a consultant
at OneDigital Retirement + Wealth.
He suggests using the well-known
and industry-accepted " style box " of an
investment advisory and fund researcher
to cull the investment menu. " To not overwhelm
[the participants] with paralysis of
10 PLANSPONSOR.COM April - May 2022
analysis by giving them too many choices,
a best [practice] is to not have overlapping
funds in the same style box, " Rivett says.
Investment Layers
A method for sponsors to arrange investments
on a defined contribution plan
investment menu is
sophistication to account for complexity,
explains
A further benefit of layering is that
through layers of
Steve Vernon, a consulting
research scholar at the Stanford Center on
Longevity.
The first layer is an asset-allocation
fund, such as a TDF. From there, the plan
sponsor should include three to six investment
options for participants who want to
allocate on their own. The final layer is a
brokerage window where the person may
select from any mutual fund, exchangetraded
fund, or
individual
stocks and
bonds, says Vernon. " That provides really
sophisticated investors with flexibility. "
Art by Irene Servillo
it could target personalized asset allocations
and risk tolerance for participants
by factoring in outside assets they have,
Vernon says. " Some participants have
their investments spread among other
IRAs [individual retirement accounts],
and their spouse might have savings
accounts. [Or] they may have specialized
needs, " he says.
A maximized asset-allocation strategy
could be to invest based on the total assets
a participant has across different accounts.
" This layering approach lets people have
[either] a one-size-fits-all fund, which
would be a target-date fund, or a mix of
[their] own assets depending on their
overall savings situation, " Vernon says.
Among the three to six investment
options to allow for diversification without
more
complexity, plan sponsors
could
include a broad-based stock fund, a broad
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PLANSPONSOR - April - May 2022

Table of Contents for the Digital Edition of PLANSPONSOR - April - May 2022

INSIGHTS
INDUSTRY ANALYSIS
RULES & REGULATIONS
UPFRONT
The DE&I Lens
By Design
Things People Do
Leakproof Your Plan
The ESG Decision
When Retirees Stay in the Plan
PLANSPONSOR - April - May 2022 - Cover1
PLANSPONSOR - April - May 2022 - CT1
PLANSPONSOR - April - May 2022 - CT2
PLANSPONSOR - April - May 2022 - Cover2
PLANSPONSOR - April - May 2022 - 1
PLANSPONSOR - April - May 2022 - INSIGHTS
PLANSPONSOR - April - May 2022 - 3
PLANSPONSOR - April - May 2022 - INDUSTRY ANALYSIS
PLANSPONSOR - April - May 2022 - 5
PLANSPONSOR - April - May 2022 - RULES & REGULATIONS
PLANSPONSOR - April - May 2022 - 7
PLANSPONSOR - April - May 2022 - 8
PLANSPONSOR - April - May 2022 - 9
PLANSPONSOR - April - May 2022 - UPFRONT
PLANSPONSOR - April - May 2022 - 11
PLANSPONSOR - April - May 2022 - 12
PLANSPONSOR - April - May 2022 - 13
PLANSPONSOR - April - May 2022 - 14
PLANSPONSOR - April - May 2022 - 15
PLANSPONSOR - April - May 2022 - 16
PLANSPONSOR - April - May 2022 - 17
PLANSPONSOR - April - May 2022 - The DE&I Lens
PLANSPONSOR - April - May 2022 - 19
PLANSPONSOR - April - May 2022 - 20
PLANSPONSOR - April - May 2022 - 21
PLANSPONSOR - April - May 2022 - By Design
PLANSPONSOR - April - May 2022 - 23
PLANSPONSOR - April - May 2022 - 24
PLANSPONSOR - April - May 2022 - 25
PLANSPONSOR - April - May 2022 - 26
PLANSPONSOR - April - May 2022 - 27
PLANSPONSOR - April - May 2022 - Things People Do
PLANSPONSOR - April - May 2022 - 29
PLANSPONSOR - April - May 2022 - 30
PLANSPONSOR - April - May 2022 - 31
PLANSPONSOR - April - May 2022 - Leakproof Your Plan
PLANSPONSOR - April - May 2022 - 33
PLANSPONSOR - April - May 2022 - The ESG Decision
PLANSPONSOR - April - May 2022 - 35
PLANSPONSOR - April - May 2022 - When Retirees Stay in the Plan
PLANSPONSOR - April - May 2022 - 37
PLANSPONSOR - April - May 2022 - 38
PLANSPONSOR - April - May 2022 - 39
PLANSPONSOR - April - May 2022 - 40
PLANSPONSOR - April - May 2022 - Cover3
PLANSPONSOR - April - May 2022 - Cover4
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