Text on screen: The Next Frontier in Personalized TDFs
PIMCO provides services only to qualified institutions and investors. This is not an offer to any person in any jurisdiction where unlawful or unauthorized. The individuals appearing in this video have not been compensated by PIMCO, are not affiliated with PIMCO, and are not current clients of PIMCO. However, Nexus338 and Sentinel Group act as fiduciary provider and recordkeeper, respectively, for myTDF® and these individuals therefore may have an incentive to recommend myTDF®. The statements made may not be representative of clients’ experiences with PIMCO, which may differ.
Text on screen: Philip Chao, Founder & CEO, Nexus338
Chao: My name is Philip Chao. I'm the founder and I'm the CIO for a firm by the name of Nexus 338.
Text on screen: Julie Doran Stewart, Head of Fiduciary Advisory Services, Sentinel Group
Stewart: My name is Julie Doran Stewart. I lead the fiduciary advisory services team for Sentinel Group. I believe that personalized target date solutions are the next evolution in automatizing the retirement plan system.
Text on screen: TITLE – The next big think in DC?; SUBTITLE – Target Date AUM Growth; Line chart showing rapid growth in target-date fund assets over time, highlighting milestones from auto enrollment and re-enrollment to a future shift toward automated personalization, with assets rising from about $43 billion in 2004 to over $3.6 trillion in 2024.
We've seen auto enrollment, auto escalation. We're now, we're using the data to the benefit of the participant on the investment side.
We believe that oftentimes retirement is not an investment problem, it is a savings problem.
Text on screen: TITLE – Coupling with Auto Features; Slide showing two interlocking gear icons labeled “Auto enrollment/Auto escalation” and “Personalized TDF,” illustrating how automated plan features work together with personalized target-date funds.
So we want to make sure that we're coupling things like personalized target date solutions with auto features that really will increase the savings rate over time.
So through, you know, secure 2.0, et cetera, we've seen the evolution of, you know, auto enrollment becoming a mandatory requirement. We see auto escalation continuing to be put into plans and we think that that's a really important component to complement the work of a personalized target date solution.
Text on screen: TITLE – Decumulation Perspective; Simple line graph showing wealth over a person’s lifespan, with assets increasing during accumulation years, peaking at retirement, and then declining during the decumulation phase.
We also, from a decumulation perspective, are looking at the various options relative to guaranteed lifetime income. And annuitization ultimately really creating sort of that pension stream that people were accustomed to during the defined benefit days.
Text on screen: Philip Chao, Founder & CEO, Nexus338
Chao: As I get closer and closer to retirement I start thinking about what they call decumulation. I have a slug of money. How do I provide a stream of income for myself?
Text on screen: Longevity Risk; Slide illustrating longevity risk with a timeline extending beyond 20 years and ending in a question mark, emphasizing uncertainty about how long retirement savings must last.
longevity risk, which is the risk of not knowing how long you're going to live, worries people a lot.
The next frontier is including lifetime income into personalized target date solution.
Text on screen: For more insights and information visit pimco.com/retirement
Text on screen: PIMCO
Disclosure
Past performance is not a guarantee or a reliable indicator of future results.
A word about risk: All investments contain risk and may lose value. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and low interest rate environments increase this risk. Reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Mortgage and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and their value may fluctuate in response to the market’s perception of issuer creditworthiness; while generally supported by some form of government or private guarantee there is no assurance that private guarantors will meet their obligations. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. Sovereign securities are generally backed by the issuing government, obligations of U.S. Government agencies and authorities are supported by varying degrees but are generally not backed by the full faith of the U.S. Government; portfolios that invest in such securities are not guaranteed and will fluctuate in value. Inflation-linked bonds (ILBs) issued by a government are fixed-income securities whose principal value is periodically adjusted according to the rate of inflation; ILBs decline in value when real interest rates rise. Commodities contain heightened risk including market, political, regulatory, and natural conditions, and may not be appropriate for all investors. High-yield, lower-rated, securities involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. Investing in securities of smaller companies tends to be more volatile and less liquid than securities of larger companies. Equities may decline in value due to both real and perceived general market, economic, and industry conditions. Derivatives and commodity-linked derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Commodity-linked derivative instruments may involve additional costs and risks such as changes in commodity index volatility or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Investing in derivatives could lose more than the amount invested. The cost of investing in the Fund will generally be higher than the cost of investing in a fund that invests directly in individual stocks and bonds. Diversification does not ensure against loss.
Target Date Funds are designed to provide investors with a retirement solution tailored to the time when they expect to retire or plan to start withdrawing money (the "target date"). Target Date Funds will gradually shift their emphasis from more aggressive investments to more conservative ones based on their target dates. Target Date Funds invest in other funds and instruments based on a long-term asset allocation glide path, and performance is subject to underlying investment weightings, which will change over time. An investment in a Target Date Fund does not eliminate the need for an investor to determine whether a Fund is appropriate for his or her financial situation. An investment in a Fund is not guaranteed. Investors may experience losses, including losses near, at, or after the target date, and there is no guarantee that a Fund will provide adequate income at and through retirement. Glide Path is the asset allocation within a Target Date Strategy (also known as a Lifecycle or Target Maturity strategy) that adjusts over time as the participant’s age increases and their time horizon to retirement shortens. The basis of the Glide Path is to reduce the portfolio risk as the participant’s time horizon decreases. Typically, younger participants with a longer time horizon to retirement have sufficient time to recover from market losses, their investment risk level is higher, and they are able to make larger contributions (depending on various factors such as salary, savings, account balance, etc.). Generally, older participants and eligible retirees have shorter time horizons to retirement and their investment risk level declines as preserving income wealth becomes more important.
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