PLANSPONSOR - October/November 2018 - 15

READY: Yes, it does qualify as a QDIA. We offer
several different investment options at various
price points. Our new factor-based version is
available at a price of 24 basis points (managed
account service and investment cost), which
is competitive with the pricing of target date
funds and very compelling relative to traditional
managed accounts.
PS: Tell me more about the investment methodology
in the factor-based version of your
Target My Retirement solution.
AXSATER: We're always looking for ways to innovate
and we're excited to leverage Wells Fargo
Asset Management's factor-based investing
expertise now within a Target My Retirement
portfolio offered by Wells Fargo Institutional
Retirement and Trust. Investment " factors " are
a bit like the DNA of investment performance.
Each " factor " is a primary characteristic of a
stock or bond that helps to explain its performance
over long periods of time, like the size of
the company that issued the security, its price
momentum, or, in the case of a bond, its term to
maturity. Factor-based investing seeks to capitalize
on decades of investment research into
those characteristics, and then use that knowledge
to better control risk.
PS: So this is an active investment strategy?
AXSATER: Think of it as a blend. We employ
indexing, but rather than tracking traditional,
market-capitalization weighted indexes, we
use proprietary indexes for those asset classes
that lend themselves to factor investing, especially
in the equity markets. Simply put, we
seek to deliver better returns and lower risk by
targeting stocks with characteristics that tend
to outperform market cap weighted benchmarks,
and avoiding stocks with characteristics
that tend to underperform the benchmarks.
This incorporates the known benefits of passive
management, such as high transparency, low
turnover, and low fees, but also provides the
potential for improved risk-adjusted returns.
PS: How does this impact participants?
AXSATER: Factors won't work every week,
month, or quarter, but the longer the investment
horizon, the higher the probability of
better results. Additionally, when you couple
the long time horizon with participants'
consistent contributions, and their behavioral
tendency to buy and hold, which is particularly
true with a QDIA, one could argue that
there isn't an investor base better suited for
factor-based investing than defined contribution
plan participants.
PS: We've heard you talk elsewhere about how
the retirement journey doesn't start and stop
with a participant's working years, when
they're accumulating retirement assets, but
also includes the years when they're converting
assets into income. Are you doing anything to
try to help plan participants after they retire?
READY: We help retired participants every day;
and currently we're working on holistic solutions
for participants all the way through retirement-helping
them figure out how much they
can draw down, how long their money will last,
what age to retire, when to take Social Security,
and how to plan for taxes efficiently. We're
exploring ways that we can help employees
achieve the life they want to live in retirement. n
INVESTMENTS IN RETIREMENT PLANS:
Target date funds are mutual funds that periodically rebalance or modify the asset mix (stocks, bonds, and cash alternatives) of the fund's portfolio and
NOT FDIC-Insured/NO Bank Guarantee/MAY Lose Value
change the underlying fund investments with an increased emphasis on income and conservation of capital as they approach the target date. Different funds
will have varying degrees of exposure to equities as they approach and pass the target date. As such, the fund's objectives and investment strategies may
change over time. The target date is the approximate date when investors plan to start withdrawing their money, such as retirement. The principal value of
the funds is not guaranteed at any time, including at the target date. More complete information can be found in the prospectus for the fund.
Mutual Funds are subject to risks. Investment returns may fluctuate and are subject to market volatility, so that an investor's shares, when redeemed or
sold, may be worth more or less than their original cost.
Target My Retirement is a managed account product and is subject to the same risks as the underlying asset class. The principal value of the account
is not guaranteed. Investment return and principal value will fluctuate with market conditions, and participants may lose money. Please carefully review
the disclosure document for a full description of services, including fees and expenses.
Target My Retirement has been designed to be able to meet the requirements for a managed account " qualified default investment alternative " under
DOL regulations. Note that plan specific requirements also apply. Wells Fargo Institutional Retirement and Trust is not a legal advisor. Plan sponsors
should consult their legal advisors for more information.
Wells Fargo Institutional Retirement and Trust charges each participant who enrolls in the Target My Retirement investment solution an asset based management
fee based on the participant's assets under management through the Target My Retirement solution. The asset based fee varies depending on the
version of the Target My Retirement solution selected by the Institutional Retirement and Trust client. In addition to the asset based management fee, assets
invested through the Target My Retirement solution are subject to fees and expenses charged by the underlying investment alternatives. Depending on the
version of the Target My Retirement solution selected by the Institutional Retirement and Trust client, the underlying investment alternatives may include
mutual funds or collective investment funds for which Wells Fargo Institutional Retirement and Trust or its affiliates may receive additional compensation.
Please refer to the product disclosure document for fee information specific to your plan.
This communication is provided for informational purposes only, is not and should not be construed in any manner as any solicitation or offer to buy
or sell any securities or any related financial instruments, and is not and should not be construed in any manner as a public offer or any securities or any
related financial instruments/products.
Recordkeeping, trustee, and/or custody services are provided by Wells Fargo Institutional Retirement and Trust, a business unit of Wells Fargo Bank,
N.A., a bank affiliate of Wells Fargo & Company.
Wells Fargo Institutional Retirement and Trust is not undertaking to provide impartial investment advice or to give advice in a fiduciary capacity under
ERISA. The information is being provided without regard to the individualized needs of any plan, plan participants, or beneficiaries.
Wells Fargo Institutional Retirement and Trust cannot provide advice regarding whether any of the products or services
described in the material may be appropriate for any plan. If the plan sponsor has questions about whether these products and
services may be appropriate for the plan sponsor's plan, please consult with a financial advisor.
Wells Fargo Asset Management is the trade name for certain investment advisory/management firms owned by Wells
Fargo & Company. These firms include but are not limited to Wells Capital Management Incorporated and Wells Fargo Funds
Management, LLC. Certain products managed by Wells Fargo Asset Management entities are distributed by Wells Fargo Funds
Distributor, LLC (a broker/dealer and Member FINRA).
SPONSORED SECTION

PLANSPONSOR - October/November 2018

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