Next Evolution Target Date Service Meets Individual Retirement Needs
LOS ANGELES/CHICAGO — April 4, 2022 — Capital Group, home of the American Funds, and the Workplace Solutions group within Morningstar Investment Management LLC, a subsidiary of Morningstar, Inc., have announced a new target date service, Target Date Plus, with personalized allocation advice tailored to a retirement saver’s specific needs and objectives. 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 experience delivering online investment advice through its user interfaces and vast network of integrated recordkeepers.
“Capital Group is excited for our highly rated1 target date series to be leveraged to create a more personalized target date service for investors saving for retirement. Target Date Plus will enable retirement plans to deliver the personalized asset allocation that participants, plan sponsors and advisors are increasingly seeking, and importantly with administrative ease,” said Brendan Mahoney, Head of Institutional Retirement Strategic Growth, Capital Group. “With this service, we expect our target date series, which thoughtfully balances both building and preserving wealth, to expand its stewardship beyond the nearly eight million2 participants we serve today.”
Target Date Plus underscores Capital Group’s efforts to provide more flexibility in how it distributes its investment services and is a natural evolution of the firm’s target date series. The service offers additional personalization by incorporating an individual’s age, salary, assets, savings rate, and company match rate. Morningstar Investment Management analyzes this information and provides the investor with a customized asset allocation and investment portfolio. Morningstar Investment Management 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. 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,” said Brock Johnson, president of Global Retirement and Workplace Solutions at Morningstar Investment Management.
Through its data network and integrations, Morningstar Investment Management 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 Investment Management has 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. preferences.
Our parent company, Morningstar, Inc., was founded on the simple idea that when people have good investment information, they can make better choices that help them achieve their financial goals. In the Workplace Solutions group at Morningstar Investment Management LLC, a subsidiary of Morningstar, Inc. and a registered investment adviser, our advocacy for the individual investor extends to the workplace retirement market where the responsibility for investing and saving now rests with employees. Our products and services—which range from a managed accounts service to target-date products to custom models and fiduciary services—are not only designed to help people save for the retirement they want, but to help them make their money last once they get there.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The Company offers an extensive line of products and services for individual investors, financial advisors, asset managers and owners, retirement plan providers and sponsors, and institutional investors in the debt and private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, debt securities, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with approximately $265 billion in assets under advisement and management as of Dec. 31, 2021. The Company has operations in 29 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on Twitter @MorningstarInc.
Capital Group, home of American Funds, has been singularly focused on delivering superior results for long-term investors using high-conviction portfolios, rigorous research and individual accountability since 1931.
As of December 31, 2021, Capital Group manages more than $2.7 trillion in equity and fixed income assets for millions of individuals and institutional investors around the world. Capital Group manages equity assets through three investment groups. These groups make investment and proxy voting decisions independently. Fixed income investment professionals provide fixed income research and investment management across the Capital organization; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.
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Although the target date portfolios are managed for investors on a projected retirement date time frame, the allocation strategy does not guarantee that investors' retirement goals will be met. Investment professionals manage the portfolio, moving it from a more growth-oriented strategy to a more income-oriented focus as the target date gets closer. The target date is the year that corresponds roughly to the year in which an investor is assumed to retire and begin taking withdrawals. Investment professionals continue to manage each portfolio for approximately 30 years after it reaches its target date.
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