Capital Group and Morningstar’s Workplace Solutions group announced a new target date service, Target Date Plus, “with personalized allocation advice tailored to a retirement saver’s specific needs and objectives.”
“It’s a pathway to create an advice component into the income discussion.”
Brendan Mahoney
The service, which employers can use as a qualified default investment alternative, blends the American Funds Target Date Retirement Series with Morningstar Investment Management’s online investment advice through its user interfaces and large network of integrated recordkeepers.
Target Date Plus will enable retirement plans to deliver the personalized asset allocation that participants, plan sponsors and advisors are increasingly seeking, and with administrative ease, according to Brendan Mahoney, Head of Institutional Retirement Strategic Growth with Capital Group.
“We’ve heard from clients of all types that they want more customization and personalization at the qualified default investment alternative (QDIA) level,” Mahoney said from the floor of the 2022 NAPA 401(k) Summit. “It’s a pathway to create an advice component into the income discussion.”
The service offers additional personalization by incorporating an individual’s age, salary, assets, savings rate, and company match rate. Morningstar Investment Management analyzes the information and provides the investor with a customized asset allocation and investment portfolio. Morningstar can also inform the individual if and when they may benefit from allocating part of their savings to a guaranteed income3 annuity.
“There is growing demand from retirement savers for investment strategies that better reflect their goals and aspirations,” Brock Johnson, president of Global Retirement and Workplace Solutions at Morningstar Investment Management, added. “Using our strong network of data integrations with recordkeepers, user experiences, and advice engines, we can power a new generation of personalized advice services that we believe can position retirement savers for better outcomes.”
Through its data network and integrations, Morningstar obtains the necessary data points from recordkeepers to furnish and build out a personalized asset allocation and fund-level portfolio for each investor.
That network also enables the service to return the investment recommendation to the recordkeeper to process and implement. Morningstar designed a user interface for the service based on its learnings from serving 1.7 million managed accounts users to enable investors to interact with the service and modify the required data points.