DOL Guidance Allows Main Street Investors Greater Access to PDI Strategies
within Target Date Funds as a Direct Result from IPA Advocacy Efforts
The U.S. Department of Labor (DOL) yesterday issued guidance in the form of an Information Letter supporting the inclusion of portfolio diversifying investment (PDI) strategies within retirement plans. The DOL’s efforts allow plan fiduciaries to more clearly and effectively assess private equity and alternative investments within target-date funds, giving Main Street investors the same access to the range of investment tools traditionally used by institutional investors within defined benefit plans.
The letter encourages fiduciaries to consider the best, long-term investment strategies for retirement savers and to focus on desired outcomes rather than merely fees and product structure. The IPA was encouraged to see both the Labor Secretary Eugene Scalia and SEC Chairman Clayton support the guidance issued yesterday.
The letter is a direct result of the IPA’s ongoing effort advocating for the inclusion of PDIs in defined contribution plans, and is a product of our recent comment letter in response to a request by the DOL for input on what plan fiduciaries should consider when evaluating less liquid products for defined contribution retirement plans.
Yesterday’s DOL announcement opens the door to a more diversified platform of alternative investment solutions for plan fiduciaries to consider, including non-listed REITs and BDCs, which provides investors greater options to diversify their portfolios and create a more holistic framework for retirement wellness.
The IPA looks forward to continuing this critical effort through direct and coalition-led advocacy, and we encourage all members to take an active role working through the IPA in helping shape future guidance and legislation advancing the PDI industry.
If you have any questions, please don’t hesitate to reach out to Tony or me.
SVP, Government Affairs and General Counsel
Institute for Portfolio Alternatives