One-size-fits-all retirement plans, like target-date funds, may be failing investors.
“All 35-year-olds aren’t paid the same, so why should they be invested the same?” asked Brad Thompson, chief investment officer at Stadion Money Management. “The problem with target dates is they’re still kind of a ‘one size, fits all.’ And, again, not all 35-year-olds are the same. They have different risk tolerances. So one glide path might not be the right glide path.”
Stadion wants to offer all those glide paths to investors.
“If you look at the river of potential of glide path offerings, right now most plan sponsors are forced to select one,” Thompson said during a visit to ThinkAdvisor’s New York office. “We want to give them the option to say, ‘Let’s select the universe of those and give [our] employees the opportunity to be in the most appropriate glide path for them.’”
To do this, Stadion has developed a small-business retirement planning solution called StoryLine.
The customizable managed account solution use exchange-traded funds to offer 426 different portfolio allocations and glide paths that can be tailored at the company level and then further refined for individual employees.
While this has become a trend among large plans, customizable retirement plans are something largely unseen in the among the micro- and small-plan markets.
“Traditionally, that type of advice and customization has been available really to just the largest plans,” Thompson said. “What we want to do is bring this down to the small marketplace.”
StoryLine will launch in the first quarter of 2016 and already has some major vendor partners lined up.