For 401(k) plan providers and participants, target-date funds are the not-so-new black.

“The vast majority of all assets are consolidating into target-date solutions within retirement plans, so this trend is only growing,” said Shaun Bromley, an institutional retirement specialist with Alliance Bernstein in New York.

In fact, TDFs will account for almost 90 percent of new contributions to 401(k) plans by 2019, according to a study by Boston-based Cerulli Associates.

That's the case in part because TDFs are popular as qualified default investment alternatives under ERISA, so a lot of auto-enrolled participants are defaulted into them.

Still, picking one that that's suitable for a plan sponsor's employees can be a tricky proposition.

Choosing an appropriate TDF “is really the single most important fiduciary decision about the investments that the plan sponsors are making,” Bromley said, “So, there's a tremendous amount of interest there and an increasing amount of different choices.”

There are many factors that bear upon a sponsor's choice – off-the-shelf or customized; aggressive, moderate or conservative; active or passive?

In explaining all that to sponsors, advisors are well-advised to remember Denzel Washington's line in “Philadelphia”: “Talk to me like I'm a 6-year old.”

“I spend a lot of time just coaching plan sponsors on the differences,” said Matthew Gulseth, an advisor with Channel Financial in Minneapolis. “I think our industry presumes too much as far as the knowledge of most plan sponsors.”

Richard Weiss, an asset manager with American Century Investments in Kansas City, agrees.

“Target-date searches get bogged down or even prejudiced by the jargon,” he said. “There's a whole new language that's arisen around target-date funds. It's almost like learning a foreign language or accounting.”

Bromley, Gulseth and Weiss served as panelists Sunday in a workshop on target-date funds at the NAPA (401)k Summit in San Diego.

Weiss said the three most important factors that plans sponsors should consider in choosing a target date fund were glide path; diversification; and the underlying management style, taking into account the demographics, income and savings rates of a sponsor's employees.

If the sponsor owns a high-tech firm in Silicon Valley and his employees' average age is 25, his best choice is probably a fund with an aggressive, equity-heavy glide path. The plan sponsor for a high-powered New York law firm where the employees' average age is 45 is probably wise to pick a fund with a more conservative glide path.

“What I tell clients is that there's no right or wrong,” Gulseth said. “It's what's right for you. Let's just document the reasons and why you've chosen to go that way.”

The conversation gets confusing when the question of whether to go with an off-the-shelf or customized fund arises.

In February 2013, the Labor Department issued “Target Date Retirement Funds – Tips for ERISA Plan Fiduciaries.” It suggested, among other things, that fiduciaries consider both options.

Weiss argued that in most cases, there is no reason for an employer to choose a custom fund.

“There's a wide array of products out there with proven expertise and track records and that have different types of structures. I can't really envision many situations that would demand the extra cost and time and liability of a purely customized solution,” he said.

Plan sponsors should also be made aware of how much participants will have to pay in fees. There is a wide difference in fee structures, even between two funds with the same target date.

Future Advisor analyzed more than 1,700 TDFs. It reported in November that 198 funds with a 2040 target date had annual cost ratios ranging from zero to 2.39 percent.

“You could drive a truck through the differentials in fees,” Weiss said.

On the other hand, fees are just one consideration, he said.

“You shouldn't let the fee tail, if you will, wag the investment dog. It's looking at return net of fees that's probably the proper perspective.”

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