Family Office
Advisors grow more enamored with target-date funds
New PlanAdviser survey probes 401(k)-plan asset-allocation recommendations. Financial advisors today seem to have an increased preference for target-date funds as opposed to funds of the "lifestyle" variety, according to PlanAdviser magazine's second annual survey of U.S. financial advisors.
Around 86% of the 175 or so advisors the magazine surveyed said that they recommend asset allocation funds for 401(k) plans. Of this number, over 66% prefer target-date funds, while only 29.3% favor risk-based funds -- a change from last year's survey, where more advisors preferred risk-based or lifestyle funds.
Data points
"This shift may be attributable to the Department of Labor 's focus on date-based solutions as qualified default investment alternatives," says PlanAdvisoer's managing editor Alison Cooke.
When asked about their favorite fund families, 26.30% of the advisors surveyed named AllianceBernstein's Retirement Strategy as their favorite lifecycle suite. Next came T. Rowe Price's Retirement Date Funds (25.40%), John Hancock's JH Lifecycle (20.30%), Fidelity's Fidelity Freedom (17.80%) and American Funds' American Funds Target Date Retirement funds (16.10%).
Among risk-based fund suites, advisors picked John Hancock's JH Lifestyle (28.90%), followed by Russell's Life Points Target Risk (17.50%), AllianceBernstein's Wealth Strategies (12.40%), Vanguard's LifeStrategy (11.30%) and Putnam's Asset Allocation (7.20%).
Respondents also picked out five funds with robust track records to recommend to their clients: American Funds' Growth Fund of America, Davis Advisers' New York Venture Fund, American Funds' EuroPacific Growth, PIMCO's Total Return, and Thornburg's International Value.
The survey's respondents had a median of $100 million in qualified-plan assets under management. Around two-thirds worked with an independent advisory firm; 32% were full-time employees of a wirehouse or regional brokerage firm; 1.2% worked as part of a CPA or accounting firm, and 6.90% described themselves as "other." -FWR
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