PLANSPONSOR - October-November 2022 - 21

INVESTMENTS |COVER STORY
age. Factors such as salary, account balance, deferral rate and
company contribution rate are all typically housed in the recordkeeping
system and/or in the payroll file.
" Instead of lumping all participants into a five-year age
cohort and treating them all the same, " Bentley says, " why not
use this additional data to create a personalized glide path at the
individual level? Of course, TDF managers pursuing personalized
TDFs cannot lose sight of what makes traditional TDFs so
popular-low cost and simplicity, or, in other words, 'pragmatic
personalization.' "
The industry sectors that Morningstar studied ranged
from accommodation and food services, with average wages
of $30,850, to information services, where salaries averaged
$91,930. Morningstar's analysis also suggests that the percentage
of workers who are employed past 65 varies by industry-e.g.,
18.68% for those in agriculture, forestry, fishing and hunting,
significantly greater than the comparable figures for mining
(4.64%), utilities (4.64%), real estate rental and leasing (12.82%),
and accommodation and food services (3.36%).
In an industry " where people typically work past age 65-
you'd like to see that reflected " in the asset allocation in the
TDF glide path, Szapiro says. " You might consider taking on
more equity risk. There are different ways that can be reflected.
Regardless, that glide path should look different from the one
that's serving people in an industry with higher salaries, [and] a
much lower Social Security replacement rate, where people tend
to retire before age 65, and we don't see that. We just see the
same equity allocation, " he says.
" You want those risks to be calibrated, at least to some extent,
to what your employee population is likely to need ... unless for
some reason you have so much money saved up you can fully
defuse your risk with bonds, which I don't think is going to be
the case for most plan participants. "
Accounting for 'Life'
While TDFs have been a good way to get employees enrolled
in a defined contribution plan and thinking about their future
retirement, older workers may need additional support to be
ready to retire when they have planned to.
Managed accounts are an investment product that can
accommodate additional personalization for workers' circumstances,
says Mike Moran, senior pension strategist at Goldman
Sachs Asset Management in New York City. A Goldman Sachs
article, " Why Personalization and Goals-Based Solutions
Matter, " makes a case for managed accounts as solutions
that can lead to greater personalization and better retirement
outcomes.
" One of the issues that tends to impede retirement saving
is, as we say in the paper, life. Life gets in the way: You have
unexpected expenses; there are times you may be out of the
workforce. So you're not saving for retirement, " Moran says.
The search for personalization may lead some plan sponsors
" to more of a managed account type of product or solution
for their participants-something that can personalize the
experience and recalibrate for individuals' retirement needs as
they go along their financial journey, " Moran says.
" You're obviously also seeing much more [education],
including financial-wellness-type programs within sponsors'
benefit offerings, " he continues, " as a way to help the participants
understand their retirement needs and,
then, again,
manage some of those financial issues that come up unrelated
to retirement that sometimes impede the ability to save for it. "
" If you're an adviser who is touting managed accounts and
you have a plan sponsor client who isn't quite ready to make
that leap, pivoting to something such as personalized TDFs is a
natural pivot, " Bentley says. " Also, personalized TDFs can work
well
in a dual-qualified-default-investment-alternative environment,
where personalized TDFs are used as a more costeffective
form of personalization in the early career years and
then you transition to full managed accounts at the selected age
trigger [e.g., at 50]. "
" The onus is on the industry to show that there's value in
adding something that's a little more personalized in terms of
what the plan lineup is going to offer, " Moran says. -Noah Zuss
" We see many sponsors that are basically
accepting the dominant glide paths, regardless
of pretty big differences in their employee
population compared with other plans. "
PLANSPONSOR.COM October - November 2022 21
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PLANSPONSOR - October-November 2022

Table of Contents for the Digital Edition of PLANSPONSOR - October-November 2022

INSIGHTS
INDUSTRY ANALYSIS
RULES & REGULATIONS
UPFRONT
Deep Dive
Managing Volatility
New Solutions
Participant ESG Demands
Good Practices
FIDUCIARY FORUM
INSIDE ANGLE
PLAN PROFILE
PLANSPONSOR - October-November 2022 - Cover1
PLANSPONSOR - October-November 2022 - Cover2
PLANSPONSOR - October-November 2022 - 1
PLANSPONSOR - October-November 2022 - INSIGHTS
PLANSPONSOR - October-November 2022 - 3
PLANSPONSOR - October-November 2022 - RULES & REGULATIONS
PLANSPONSOR - October-November 2022 - 5
PLANSPONSOR - October-November 2022 - 6
PLANSPONSOR - October-November 2022 - 7
PLANSPONSOR - October-November 2022 - 8
PLANSPONSOR - October-November 2022 - 9
PLANSPONSOR - October-November 2022 - UPFRONT
PLANSPONSOR - October-November 2022 - 11
PLANSPONSOR - October-November 2022 - 12
PLANSPONSOR - October-November 2022 - 13
PLANSPONSOR - October-November 2022 - 14
PLANSPONSOR - October-November 2022 - 15
PLANSPONSOR - October-November 2022 - Deep Dive
PLANSPONSOR - October-November 2022 - 17
PLANSPONSOR - October-November 2022 - 18
PLANSPONSOR - October-November 2022 - 19
PLANSPONSOR - October-November 2022 - 20
PLANSPONSOR - October-November 2022 - 21
PLANSPONSOR - October-November 2022 - 22
PLANSPONSOR - October-November 2022 - 23
PLANSPONSOR - October-November 2022 - 24
PLANSPONSOR - October-November 2022 - 25
PLANSPONSOR - October-November 2022 - Managing Volatility
PLANSPONSOR - October-November 2022 - 27
PLANSPONSOR - October-November 2022 - 28
PLANSPONSOR - October-November 2022 - 29
PLANSPONSOR - October-November 2022 - New Solutions
PLANSPONSOR - October-November 2022 - 31
PLANSPONSOR - October-November 2022 - 32
PLANSPONSOR - October-November 2022 - 33
PLANSPONSOR - October-November 2022 - Participant ESG Demands
PLANSPONSOR - October-November 2022 - 35
PLANSPONSOR - October-November 2022 - Good Practices
PLANSPONSOR - October-November 2022 - 37
PLANSPONSOR - October-November 2022 - FIDUCIARY FORUM
PLANSPONSOR - October-November 2022 - INSIDE ANGLE
PLANSPONSOR - October-November 2022 - PLAN PROFILE
PLANSPONSOR - October-November 2022 - Cover3
PLANSPONSOR - October-November 2022 - Cover4
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