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RiverSource Investments and PLANSPONSOR Research: Most Mid and Large 401(k) Plans Offer Lifecycle Funds

New research indicates that lifecycle funds may have reached a tipping point with regard to large and mid-sized defined contribution plans, while smaller plans have been slower to adopt these funds. The research reveals that nearly nine out of 10 mid and large defined contribution plans offer lifecycle funds, while just more than half of small plans include at least one lifecycle fund in their line-up. The research was sponsored by RiverSource Investments, LLC, a subsidiary of Ameriprise Financial, Inc., (NYSE:AMP) and conducted by PLANSPONSOR magazine, and the data supports a continuing trend of larger plans more quickly adopting innovative investment products.

The high acceptance of lifecycle funds by most mid and large plans reinforces our view that plan sponsors see these funds as an effective asset allocation solution for retirement plan investors, said Chris Keating, head of institutional sales and client services at RiverSource Investments. We believe that the adoption phase of lifecycle funds is nearly complete for mid and large plans, which should set the stage for a new breed of lifecycle funds and increased competition in the marketplace.

Nearly 70 percent of mid and large plan sponsors responded that their participants like the lifecycle funds approach to defined contribution plan investing while a smaller majority (57 percent) of small plan sponsors agreed. Actual asset levels tell a different tale, with large plans reporting 17 percent of plan assets in lifecycle funds, and mid and small plans reporting nearly 23 percent.

By offering lifecycle funds in 401(k) plans, sponsors are providing access to institutional-quality asset management to their employees, said Keating. Plan sponsors are taking a proactive role to help participants understand the role of lifecycle funds in achieving their retirement goals.

An article on the survey is available in the October issue of PLANSPONSOR magazine.

About the research

In July and August 2007, feedback was solicited from small, mid-size, and large defined contribution plan sponsors on their utilization of and perceptions about lifecycle funds. For the survey, lifecycle funds were defined as both target-date, risk-based, and balanced lifecycle funds.

A total of 2,335 firms participated in the study, which was conducted via a web-based, anonymous questionnaire. Of these, 1,327 or 56.8 percent were small plans (having less than $20MM in defined contribution assets), 623 were mid-size plans ($20MM-$200MM in assets), and 385 were large plans (more than $200MM in assets). The questionnaire, developed jointly by RiverSource Investments and PLANSPONSOR, consisted of 22 questions that covered topics ranging from average participant balance size to the use of lifecycle funds as the default option.

RiverSource Investments, a sponsor of lifecycle funds, provided financial support for this study. RiverSource Investments role in the study was not disclosed to research participants. PLANSPONSOR is not affiliated with RiverSource Investments and nothing herein should be taken as an endorsement by PLANSPONSOR of RiverSource Investments products or services.

About RiverSource Investments

RiverSource Investments develops and manages asset growth, preservation and income solutions that revolve around the needs of todays investors. The firms specialized investment platform provides access to investment and research professionals located in strategic investment centers in the U.S. and overseas. As a leading source of investment insight and innovation, RiverSource Investments delivers a full range of solutions across the risk return spectrum to retail investors and their advisors and to institutional investors including corporations, pension funds, governments, foundations and endowments.

RiverSource Investments, LLC is an SEC-registered investment adviser that offers investment products and services under the names RiverSource Institutional Advisors, RiverSource Alternative Investments, RiverSource Capital Management and RiverSource Insurance Assets.

About Ameriprise Financial

Ameriprise Financial, Inc. is a leading financial planning and services company that provides solutions for clients asset accumulation, income management and insurance protection needs. Through a nationwide network of more than 10,000 financial advisors, Ameriprise Financial delivers tailored solutions to clients through a comprehensive and personalized financial planning approach built on a long-term relationship with a knowledgeable advisor. The Company specializes in meeting the retirement-related financial needs of the mass affluent. Financial advisory services and investments are available through Ameriprise Financial Services, Member FINRA and SIPC.

For more information, visit ameriprise.com.

You should consider the investment objectives, risks, charges and expenses of a mutual fund carefully before investing. For a free prospectus, which contains this and other important information about the funds, call 888-791-3380. Read the prospectus carefully before investing.

Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.

© 2007 Ameriprise Financial, Inc. All rights reserved.

Contacts:

RiverSource Investments
Ryan Lund, 612-671-3459
ryan.s.lund@ampf.com

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