Blog Series: The 401(k) Marketplace

October 2nd 2017, by Garrison R. North

Investment choices lie at the heart of a company sponsored retirement plan, and having access to excellent choices gives the participants in the plan an investing advantage. Master’s internal Investment Review Committee (IRC) follows a structured process when evaluating and selecting investment options for a plan.

Our investment analysis begins with an investment company’s plan platform. Many platforms create a “pay-to-play” arrangement where the employer is required to include a certain number of the sponsoring company’s proprietary investment products. We avoid these companies, and instead, work only with companies who allow us complete freedom in our investment choices for the plan. We believe that this freedom of choice allows us to offer better investment choices to the participants and eliminates a common conflict of interest.

We then select investments in various categories so that the plan provides options that each participant needs no matter his or her life stage or risk tolerance. Along with funds in a wide variety of asset classes, we include a suite of retirement target date funds that automatically reduce risk the closer participants come to retirement. After thoroughly researching the universe of target date funds, we identified four excellent target date fund families. We use the target date funds from one of these fund families in each of our plans.

Building a fund lineup is the initial step in our investment management process, but we also review the lineup quarterly and monitor our selections using multiple criteria. This allows us to recognize trends in investment performance and gives participants access to a fund lineup that is always in sync with our criteria. We go above and beyond our fiduciary duty by providing written documentation of our investment review process to employers. By involving them in our process, we help employers actively engage in their fiduciary responsibility.

Our entire retirement plan service structure is characterized by diligent processes and procedures, and we give the same attention to investment management. By leveraging our IRC, the company sponsored retirement plans we service remain relevant through a wide variety of market environments.

*There are certain risks and considerations to take into account prior to investing in a target-date fund. A target-date fund; also known as a lifecycle or age-based fund; is a fund portfolio that helps investors saving for retirement choose a single portfolio aligned with the year closest to their expected retirement. It is designed to provide an asset mix that becomes more conservative as the date for expected withdrawals to begin approaches. Consider in addition to your age or date of retirement other factors, including your risk tolerance, personal circumstances, and complete financial situation. A target-date fund is not guaranteed and it is possible to lose money by investing in the fund, even after the target date has passed. Certain funds’ asset allocations may be subject to change and the extent to which the allocations of a target-date fund among types of investments may be modified without shareholder vote.