Two Major 401k Firms Announce Target Date Deal

Fully 80 percent of pre-retirees find active management appealing as an investment strategy

401k, target date, retirement, MassmutualA new active management strategy.

Fresh on the heels of its Legg Mason news, MassMutual announced another alignment with a major 401k firm, this time T. Rowe Price. MassMutual will feature an active management target date fund with dynamic tactical asset allocation by T. Rowe.

The MassMutual Select T. Rowe Price Retirement Funds are “designed to address a spectrum of risks, including inflation, longevity, and market risks, which retirement savers face during their accumulation years and through retirement,” according to the companies.

“MassMutual knows based on our experience as a recordkeeper that many retirement savers invest either too conservatively when starting to save for retirement or, conversely, too aggressively as they approach retirement,” Tina Wilson, head of investment solutions innovation, said in a statement. “T. Rowe Price’s target date fund solution seeks to provide savers sufficient assets at retirement to withdraw from at and through retirement, the ability to withdraw money needed to support living expenses over their lifetimes, and a potential buffer to assist with unexpected expenses, such as health care costs.”

“We are excited to work with MassMutual as the subadvisor on this actively managed target date solution,” added George Riedel, head of U.S. Intermediaries with T. Rowe Price. “As one of the leaders in target date investing in the U.S., with proven expertise and demonstrated strong long-term performance, we believe these funds can help MassMutual clients achieve their retirement goals.”

Recent research by MassMutual indicates that many retirees and pre-retirees continue to favor active management as an investment strategy. Nearly half (47 percent of pre-retirees; 49 percent of retirees) say they have assets invested in actively managed mutual funds, according to the MassMutual Retirement Savings Risk Study. In addition, 80 percent of pre-retirees and 71 percent of retirees find active management appealing as an investment strategy.

However, some retirees and pre-retirees may be taking too much risk with their retirement savings. Eighty-eight percent of retirees and 73 percent of pre-retirees who rely on a financial advisor report that their advisor has recommended they invest more or somewhat more conservatively than they currently do, the MassMutual study reports.

“While risk differs between investors, it can be difficult for retirees and pre-retirees to recover from losses, especially five years before and into retirement,” Wilson concluded. “Investing in the MassMutual T. Rowe Price Select TDF is an important investment consideration when retirees depend upon those assets for income to support their lifestyle. The firm is a pioneer in the target date space, and their commitment to dedicated asset allocation research and development coupled with an experienced portfolio management team provides financial intermediaries and plan sponsors with a very compelling solution.”

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