Rebuttal to Ben Inker Of GMO On The Defined Contribution Challenge by Ronald J. Surz 

Ben Inker of GMO On The Defined Contribution Challenge, April 5, 2014

Ben Inker is wrong. Target date funds cannot provide adequate savings for retirement, regardless of how hard you try. Ben Inker advocates a “dynamic asset allocation” TDF as the solution, but the only correct solution is saving enough. “Save enough and don’t lose it” is the recipe for a comfortable retirement. Investments matter, especially the “don’t lose it” ingredient. Consultants can help savers financially navigate to adequate savings through time but this is a one-on-one managed account rather than a one-size-fits-all target date fund.

Ben inker

It’s important to understand what target date funds can and cannot achieve.  That’s why we’ve written a handbook on target date funds – a concise and comprehensive guide for fiduciaries. This booklet will be released soon. In the meantime, a pre-release draft is available at: book to help pension consultants.

Target date funds are very important, and becoming more important every day.  They are the fastest growing pension plan asset, forecast to quadruple from one $trillion today to 4 $trillion by 2020, at which time TDFs will represent half of all 401(k) assets. We’ve written this book to help fiduciaries, primarily pension consultants, better understand target date funds because there is a lot of confusion despite their growing popularity. Some of the confusion is even propagated by regulators. Some consultants have decided to steer clear of target date funds, largely because of the confusion, but this will become increasingly harder to do if they want to remain competitive in 401(k) plans. On the other hand, those who are selecting TDFs need to understand, & be concerned about, their fiduciary exposures.

This train is speeding down a rickety track that can and should be repaired.

Fiduciary Handbook for Understanding and Selecting

Target date funds are a good idea that could become a great idea. It wouldn’t take much more to do what is best for beneficiaries. This handbook is normative. It explains what should be provided by target date funds.

Each Chapter has 3 sections:

1. Statement of facts written by Ronald Surz, President and CEO of Target Date Solutions. During Ron’s 40 years of pension consulting he has advised several $ trillions, primarily on asset allocation and investment policy. He wrote the educational book on investment policy for Certified Investment Management Analysts (CIMAs). Ron is the sub-advisor of the SMART Fund Target Index offered by Hand Benefit and Trust, Houston.

2. Legal guidance written by John Lohr, independent ERISA attorney and author. During his 40-year career, John has served as corporate counsel to E.F. Hutton and Lockwood Financial Group and has committed to improving the financial literacy of the investing public and their investment professionals. John’s most recent endeavors include the introduction of “Fiduciary Forensics.”

3. Ethical Perspective written by Mark Mensack, Chief Ethics Officer of Mark D. Mensack, LLC. Prior to his 19 years in financial services, Mark taught philosophy and ethics at the United States Military Academy. Mark writes the 401k Ethicist column for the Journal of Compensation & Benefits

Are Target Date Funds Good for Investors?

Target Date Solutions is a division of PPCA Inc. Please visit our parent company at www.ppca-inc.com. Founded in 1992, PPCA reveals the truth to those brave enough to look. We are building a tribe of like-minded people who share our vision for change (see http://www.ted.com/talks/seth_godin_on_the_tribes_we_lead.html ).

PPCA provides services in investment manager due diligence and investment program design, including target date funds and Surz Style Pure® Indexes.

Our founder is Ron Surz …

Ronald J. Surz
President & CEO, PPCA, Inc.
78 Marbella, San Clemente, CA 92673
Phone: (949) 488-8339(949) 488-8339
For more information about Ron, see him In the News

Ronald J. Surz is president of PPCA Inc. He is a pension consulting veteran, having started with A.G. Becker in the 1970’s. Ron earned an MBA in Finance at the University of Chicago and an MS in Applied Mathematics at the University of Illinois, and holds a CIMA (Certified Investment Management Analyst) designation.

He has published regularly in such publications as The Journal of Wealth Management, The Journal of Investing, Journal of Portfolio Management, Pensions & Investments, Senior Consultant, HorsesMouth and the IMCA Monitor, as well as contributed to and edited several books. Ron’s most recently co-edited book is Hedge Funds: Definitive Strategies and Techniques (Wiley Finance).

For additional information about Ron, see his profile on LinkedIn. You may also follow Ron on newsle.com/ronsurz (a news tracking service) and Howling Wolf (an organization dedicated to financial and investment literacy).