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Participant Preferences in Target Date Funds Presenter Name, Title* Date, Presentation Location *Broker / Dealer disclosure if presented by a registered.

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Presentation on theme: "Participant Preferences in Target Date Funds Presenter Name, Title* Date, Presentation Location *Broker / Dealer disclosure if presented by a registered."— Presentation transcript:

1 Participant Preferences in Target Date Funds Presenter Name, Title* Date, Presentation Location *Broker / Dealer disclosure if presented by a registered representative C (2/2012)

2 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline This paper has been prepared by the ING Investment Management and the ING Institute for Retirement Research for informational purposes. Nothing contained herein should be construed as (i) an offer to sell or solicitation of an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. Any opinions expressed herein reflect our judgment and are subject to change. Certain of the statements contained herein are statements of future expectations and other forward- looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (1) general economic conditions, (2) performance of financial markets, (3) interest rate levels, (4) increasing levels of loan defaults (5) changes in laws and regulations and (6) changes in the policies of governments and/or regulatory authorities. The opinions, views and information expressed in this commentary are subject to change without notice based on market conditions and other factors. The information provided is not a recommendation to buy or sell any security. Products and services are offered through ING family of companies. Please log on to for information regarding other products and services offered through ING family of companies. Not all products are available in all states. © 2012 ING Investments Distributor, LLC – 230 Park Avenue, New York, NY 10169, ING North America Insurance Corporation, One Orange Way, Windsor, CT This paper has been prepared by the ING Investment Management and the ING Institute for Retirement Research for informational purposes. Nothing contained herein should be construed as (i) an offer to sell or solicitation of an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. Any opinions expressed herein reflect our judgment and are subject to change. Certain of the statements contained herein are statements of future expectations and other forward- looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (1) general economic conditions, (2) performance of financial markets, (3) interest rate levels, (4) increasing levels of loan defaults (5) changes in laws and regulations and (6) changes in the policies of governments and/or regulatory authorities. The opinions, views and information expressed in this commentary are subject to change without notice based on market conditions and other factors. The information provided is not a recommendation to buy or sell any security. Products and services are offered through ING family of companies. Please log on to for information regarding other products and services offered through ING family of companies. Not all products are available in all states. © 2012 ING Investments Distributor, LLC – 230 Park Avenue, New York, NY 10169, ING North America Insurance Corporation, One Orange Way, Windsor, CT IMPORTANT INFORMATION C (01/12)

3 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline 3 12% 16% 38% 10% 11% 13% 5-7% 6-8% 20-25% 15-20% 35-40% 7-10% Source: ICI, EBRI, PSCA, McKinsey; McKinsey projects traditional target-date funds will represent 35-40% of all DC assets by 2015, or 60% if balanced and target-risk suites are included. $4.1T$5.4 - $6.0T Defined Contribution Assets PPA / QDIA: Targets become main dish on investment menus

4 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline Target Date Use 4 IntendedActual

5 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline Asset Allocation at “Target Date” 5

6 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline Unique Look at a Unique Fund Option 6 Different Kind of Option Participant View

7 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline Study Details 7  ING Investment Management and the ING Retirement Research Institute commissioned an online survey to better understand Defined Contribution (DC) plan participant preferences in and expectations of Target Date Funds  540 DC Plan Participants responded to the survey. All respondents are currently contributing to an employer-sponsored retirement plan (ESRP), age 25+ and are a primary/joint financial decision maker for their DC plan. 212 use target-date funds within their ESRP (“Users”) 328 do not use target-date funds (“Non-users”) Respondents who choose not to use a target-date fund within their plan (43) Respondents who don’t have a target date available in their plan (285)  Data is weighted on household income and gender within the total sample.  The study was conducted in September, 2011, by Synovate  ↑↓ Indicates significantly higher or lower Target Date-User vs. Non-user response at the 90% confidence level; at the 90% confidence level, the margin of error in the study was +/- 3%

8 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline Retirement - Insurance - Investments8 Time, Comfort and Confidence Many retirement plan participants – particularly those who do not use Target-date funds – indicate they lack the time, comfort and confidence to actively manage their retirement investment. Target-date funds may provide a solution

9 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline TDF Users More Comfortable about Investment Allocation 9 “I am comfortable deciding how much to invest in each investment option in my employer- sponsored retirement plan.” ↑ ↓ ↑

10 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline TDF Users Feel They Have Enough Time 10 “I have the time that’s required to keep an eye on my investment and to make changes as market conditions change”

11 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline TDF Users More Confident About Retirement 11 “I am confident that I will reach my retirement goals.” ↑ ↓ ↑ ↑ ↑ ↑

12 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline Investment Understanding vs. Action 12 Many participants report that they are not confident about their understanding of key investment terms; those who do not use Target Date Funds report lowest confidence for all key terms. Increased confidence of Target Date-Users does not necessarily equate with appropriate Target Date use. Diversification Rebalancing Time Horizon Potential opportunity to improve understanding of Target Date Funds, especially among Non-users

13 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline Understanding Key Target Date Concepts` 13 Confident Not very confident Time Horizon DiversificationRebalancing Risk Tolerance Glide Path “How confident are you that you understand each of these investment terms?”  ↓ ↑ ↓ ↑ ↓ ↑ ↓ ↑ ↓ ↑ TDFNon- -usersusers TDFNon- -usersusers TDFNon- -usersusers TDFNon- -usersusers TDFNon- -usersusers

14 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline Rebalancing 14 Never Less than once a year Once or twice a year Monthly Weekly TDF UsersNon-users 49% rebalance 1+ x / yr 37% rebalance 1+ x / yr “Intended” TDF Use; funds rebalance themselves… so investors shouldn’t need to ↓ ↑

15 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline Diversification (Target Date-Users Only) 15 % of plan balance invested in a TDF ~2/3 Reasons Target Date users further diversify

16 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline Understanding of Target Date Funds 16 ↑ ↑ ↓ ↑ ↑ ~1/3 TDF users

17 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline Why NOT Invest in a Target Date Fund? 17 Is a TDF Available (non-Target Date users)? Reasons for NOT investing in TDF Reasons participants choose not to invest in a target date fund

18 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline Design Preferences 18 There are a number of considerations for Employers who are considering Target Date funds … whether as a standard menu option, or as a QDIA… … Participant preference and interest may help guide these decisions.

19 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline Glide Path: “To” vs. “Through” 19 Please note: This chart is for illustrative purposes only. Actual equity allocations can vary significantly between target date managers before and after the retirement dates.

20 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline Preferred Investment Approach at / Near Retirement 20 80% 66% ↑

21 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline TDF-user Interest: Diversification 21 89% 84% ↑

22 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline More Information 22 “I would like to get more information and education about Target Date Funds from my employer and plan provider.” (Excludes neutral.)

23 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline Insight and Opportunity 23 Target Date Fund investors, generally, are more confident of their decisions and their retirement potential … … but there is opportunity to educate both users and non- Target Date-users, and improve understanding and, potentially, behavior.

24 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline A Target Date Fund will Increase my Confidence 24 That I am making good investment decisions… That I will have a successful retirement…

25 Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline More Information… 25 INGRetirementResearch.com INGIM.com


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