The cost of custom may be
less than you think

Back to Custom Target Date Builder

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The definition of value

Value
Val-ue val_yu

  1. the monetary worth of something
  2. a fair return or equivalent in goods, services, or money for something exchanged
  3. relative worth, utility, or importance

-Merriam-Webster

While mass produced, off-the-shelf products and services have their place and use, customization often elevates an experience, providing an unmatched level of satisfaction. The bespoke suit tailored perfectly to fit the contours of an individual’s body is not only more comfortable, but it makes the wearer feel better. A custom-built house allows a homeowner to indulge his or her passion for outdoor entertaining or to accommodate an aging parent in ways that an existing home cannot.

The hurdles to more widespread customization tend to be time and money. When custom alternatives require too much time or great expense, most individuals end up settling for something less.

However, when customization saves time, improves outcomes, and comes at a relatively small additional cost, the value can become too powerful to ignore.

With the introduction of BNY Mellon’s Custom Target Date BuilderSM, real customization, economically priced, is now available in the employer-sponsored retirement plan marketplace—and it’s raised the bar on what small and mid-size plan sponsors should expect from their plan providers.

Flexible value, built in

*If the plan sponsor hires Wilshire as the 3(38) fiduciary (in addition to the glidepath/model management),
the five-basis-point fee would be on total plan assets. As of October 2021. Subject to change.

Features

BNY Mellon Custom Target Date BuilderSM offers several key features not available with conventional investment options within an employer-sponsored retirement plan, including:

  • Choice of five glide paths, 18 asset classes
  • Open architecture of active and passive investment strategies—mutual funds and/or collective trusts
  • Manager due diligence, screening, and asset allocation models… powered by Wilshire
  • Technology that simplifies advice delivery

 

Benefits to plan sponsors and participants

The advantages enjoyed by plan sponsors and participants lead to a more attractive plan offering, lower costs, reduced risk to the plan sponsor, and the potential for better investment outcomes.

  • Custom target date portfolios aligned to plan and plan participant needs
  • Reduces plan sponsor’s fiduciary risk
  • Customizes portfolios to reflect plan demographics
  • Access to institutional-grade manager selection and asset allocation advice
  • Access to wider investment opportunities
  • Access the benefits of professional management without the need for participant engagement

 

Benefits to Retirement Plan Professionals

Retirement Plan Professionals (RPP) gain several critical competitive advantages that can result in winning more business, retaining assets, and scaling their practices in a more cost-efficient manner.

  • Built-in tools support consultative efforts
  • Flexibility to use an RPP firm’s investment management research and portfolio construction intellectual capital
  • Innovative technology makes high-touch customization scalable
  • Improves new business development and strengthens existing client relationships
  • Ability to consult across entire plan AUM, not just Core menu

 

Pricing menu

The unique features and benefits offered by BNY Mellon Custom Target Date BuilderSM are available for about 50 basis points or less. This fee consists of two components:

  1. Glidepath/model management. This fee is five basis points, based on the value of the target-date assets, and includes the construction and management of the portfolio models and the target-date glidepath. This assumes the RPP selects the investments on behalf of the plan.
    Note: For plans where the plan sponsor elects to hire Wilshire as a full 3(38) fiduciary to the plan—as well as for glidepath and model management—the five-basis-point fee is based on all plan assets.
  2. Underlying fund fees. Blended fees of the underlying investment strategies—whether funds or CITs—can range from 29-44 basis points.  Depending on the actual relative mix of index and actively managed investment strategies selected by the RPP or plan sponsor, the cost of the underlying investments may be lower or higher than that range.

 

RPPs interested in learning more about BNY Mellon Custom Target Date BuilderSM are welcome to call 844-545-1257 or visit us at im.bnymellon.com/ctdb.

Important Information for BNY Mellon Custom Target Date BuilderSM

General. The Custom Target Date Builder is designed to help financial professionals assess how custom target date portfolio models may be built for their defined contribution plan clients. Unlike a target date fund product that invests in a fixed set of funds that do not vary by plan, a custom target date portfolio model uses the actual fund options included in a plan’s particular investment menu. This online tool may be used to create hypothetical custom target date models that are comprised of portfolio allocations for plan participants with different target retirement ages based on a proposed plan menu that you select for the plan. The proposed fund menu must meet certain asset class requirements, and at least two BNY Mellon fund options must be included. You will also be asked to choose from 5 different levels of risk for the model’s glidepath.

Powered by Wilshire. Based on this information, hypothetical custom target date portfolio models will be generated using the glidepath methodology of Wilshire Associates Incorporated (“Wilshire”). The Custom Target Date Builder is distributed by BNY Mellon Securities Corporation (“BNY Mellon”), a registered broker-dealer and a BNY Mellon Investment Management firm. Wilshire has been engaged by BNY Mellon to develop this online tool on its behalf. The Custom Target Date Builder does not provide investment advice, and BNY Mellon and Wilshire are not acting as fiduciaries under this online program. For purposes of determining the proposed fund menu, financial professionals may choose from the plan’s existing fund options or any other option from a universe of available funds. However, only those funds that have been pre-screened by Wilshire will be selected for asset allocation under its models. Additionally, fund options from Wilshire’s list of preferred funds that have passed its investment manager due diligence screens (the “Focus List”) generally will also be selected for asset allocation. The mere fact that a fund has been placed on Wilshire’s Focus List, or is otherwise selected for asset allocation under its models, should not serve as the primary basis for any plan investment decisions. Any fund (including its share class) that is available for selection for the proposed fund menu may or may not be accessible through the plan’s existing recordkeeping platform. Wilshire is a diversified global financial services firm that serves in excess of 500 clients across 20 countries an independent firm for over 40 years, is supported by a global network of offices in the U.S., Europe, and the Asia Pacific. Today, Wilshire remains a privately held, 100% employee-owned corporation.

Educational Purpose. The hypothetical portfolio models that are generated by the Custom Target Date Builder, including any Focus List or any other funds selected for asset allocation under Wilshire's models, are intended to be educational, and they are not tailored to the investment needs of any specific plan or plan investor. The funds or proposed funds that are included in the portfolio models represent just one way that a diversified portfolio may be constructed and not the only way to construct a diversified portfolio. Accordingly, the portfolio models including any funds selected for asset allocation should not serve as the primary basis for any plan investment decisions, and the portfolio models generated by this online tool should not be shared with plan participants. The provision of this hypothetical portfolio model information including any funds identified from the Focus List do not obligate Wilshire or BNY Mellon to provide any such information on a regular basis.

Portfolio Model Providers. The plan client/fiduciary does not have an agreement with Wilshire (unless they have engaged Wilshire to provide the “3(38) Investment Manager” Services for Model Portfolios). Plan fiduciaries should carefully research any potential fund or portfolio model before making an investment decision, and other funds or portfolio models with similar risk and return characteristics may be available. If a plan client wishes to implement any custom target date portfolios, Wilshire or another 3(38) portfolio model provider should be hired by the plan client. Unlike Wilshire, other 3(38) providers may be unable to implement custom portfolios unless they are also hired to select the plan menu. BNY Mellon’s Custom Target Date Builder does not provide fiduciary advice with respect to the construction of portfolio models, or the selection of 3(38) portfolio model providers for plans.

Investors should carefully consider the investment objectives, risks, charges and expenses of the investment options in the plan before investing. For mutual funds and bank-maintained collective investment funds, the prospectus or similar disclosure document contains this and other important information and should be read carefully before investing. For a prospectus or similar disclosure document, please contact your BNY Mellon Retirement Specialist.

All investments involve some level of risk, including loss of principal. Certain investments have specific or unique risks.

An investment in a target date strategy does not eliminate the need for an investor to determine whether a strategy is appropriate for their specific financial situation. An investment in a strategy is not guaranteed. Investors may experience losses, including losses near, at, or after the target date, and there is no guarantee that a strategy will provide adequate income at and through retirement.

Bank-maintained collective investment funds and their units are not registered under federal and state securities laws in reliance upon applicable exemptions. Because these funds are not mutual funds, they are governed by different regulations, restrictions and disclosure requirements. For example, these funds are subject to banking and tax regulations which, among other things, limit participation to certain eligible qualified retirement plans (stock bonus, retirement, pension and profit-sharing accounts) and governmental plans.

The tool will require a minimum of two BNY Mellon Investment Management investment options be included among up to 18 strategy allocations in the target date portfolio.

Note: In the event that a plan client wishes to proceed with engaging a fiduciary provider of custom target date services, the RPP may arrange for a separate discussion with Wilshire, whose services are provided within an “ERISA 3(38)” fiduciary framework to mitigate fiduciary risk

The use of the tool is subject to Wilshire’s User Agreement.

BNY Mellon Investment Management is one of the world’s leading investment management organizations, encompassing BNY Mellon’s affiliated investment management firms and global distribution companies. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may also be used as a generic term to reference the corporation as a whole or its various subsidiaries generally.

BNY Mellon and Wilshire Associates are not affiliated entities.

Not FDIC-Insured | No Bank Guarantee | May Lose Value

MARK-216967-2021-10-04