The five principles support investor choice and regulatory clarity as policymakers consider expanding access to alternatives.
MFA published a set of 401(k) principles in response to President Donald Trump’s Executive Order seeking to expand access to alternative assets in defined contribution retirement plans. The five principles are designed to support the expansion of investment options for retirement savers, reduce regulatory uncertainty for plan sponsors, and promote better investment outcomes for 401(k) account holders.
“Retirement savers are best served by having access to a broad range of investment options that meet their long-term horizons,” said Bryan Corbett, MFA President and CEO. “These principles offer a roadmap to help policymakers empower
Fiduciaries may choose to include alternative strategies for a variety of reasons, which can include enhancing returns, reducing volatility, and diversifying portfolios. MFA’s principles seek to help policymakers strike the right balance between fostering innovation in defined contribution plans and preserving safeguards that protect investors.
MFA’s five principles are:
- Plan beneficiaries are best served with a flexible and wide range of investment options. This includes exposure to alternative investment strategies through target date or other asset allocation funds to help meet participants’ retirement savings needs.
- Regulatory clarification on alternative investment strategies should be investment strategy neutral. Plan fiduciaries are best equipped to select appropriate investment options for their participants – not policymakers.
- Professional investment managers and fiduciaries provide important risk management. They ensure alternatives are implemented responsibly and in line with fiduciary standards and have a duty to adhere to those standards.
- Fees should be evaluated based on the nature and breadth of the investment services being provided and the character of each plan and its participants. Cost alone is not a good metric when selecting investment options.
- Overzealous litigation must be addressed. It deters innovation and pushes plan sponsors toward commoditized investments at the expense of long-term returns.
Source: MFA
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