Spotlights

Our comprehensive collection of investment insights

“…{A} trustee has a continuing duty—separate and apart from the duty to exercise prudence in selecting investments at the outset—to monitor, and remove imprudent, trust investments.”

- Tibble v. Edison

UNDERSTAND THE RISK

Recent litigation suggests that plan fiduciaries must consider changing circumstances and market environments when choosing the plan's investments. When it comes to fixed income, there is a lot of change to consider. For decades, bonds have often been viewed as safe and stable investment options. Today, the environment is changing and traditional fixed income offerings are no longer the “safe” option they were before

Meet Chris

She has some extra money that she wants to invest somewhere safe that will earn her a return. She has heard that Treasury bonds are safe, so she goes online to buy one. Let’s see what happens...

 

For illustrative purposes only.


IDENTIFY PARTICIPANT NEEDS

Under the Employee Retirement Income Security Act (ERISA), a plan fiduciary is required to make decisions—including decisions about the plan's investment options—based solely on the needs of the plan participants and beneficiaries. When participants are impacted by changing market environments, plan fiduciaries should assess the plan's investment options. Yet there is no one-size fits-all approach.

Considering factors like plan objectives and demographics can lend insight into the fixed income options that may best fit a specific plan.

SIMPLIFY

Plan Profile

Majority of participants are early and mid-career

Participants have limited investment knowledge (i.e., less sophisticated)

High likelihood that older participants have assets outside of the plan and access to professional investment advice

Products to Consider

Core Bond

Limit fixed income offering to Core Bond

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DIVERSIFY

Plan Profile

Majority of participants are late-career and near-retirees

Participants are generally sophisticated

Participants have access to professional investment advice through the Plan

Robust participant education resources

Products to Consider

Diversified Options

Expand the universe of fixed income options such as non-traditional bond, high-yield, or global fixed

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STREAMLINE

Plan Profile

Large plan assets ($100mm+)

Majority of participants are late-career and near-retirees

Paternalistic plan sponsor

Participants have limited investment knowledge

Access to retirement plan advisor or consultant with fixed income management expertise

Willingness to accept additional fiduciary responsibility

Resources to shoulder additional operational costs and administrative responsibilities

Products to Consider

White Label

Establish a multi-manager structure that incorporates a mixture of fixed income strategies and allows fiduciaries to allocate among them as markets dictate

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