"One of my clients had [the company] as a target-date choice in his plan, but the expense ratio was quadruple what Vanguard actually charges." Also considering cost, Gambaccini of Acorn Financial Services said that for clients with more than 0,000 in assets, using a target-date fund is more expensive than building a custom allocation based on specific client goals.He gave two reasons: the extra layer of management needed to rebalance the fund of funds, and that target-date funds are less effective than a personalized approach. More than 700 of our readers, between ages 50 and 89, told us what activities they want in retirement communities.Our survey respondents and data research pointed us to two ideas for single seniors."So anyone investing in these funds, especially the farther-out years, needs to be prepared for a lot of volatility." Watch out for fee padding, he added."The gold standard is Vanguard, whose fees range from 0.14 percent to 0.16 percent," Stark said.
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"These funds can cause people to pay less attention to their portfolio because they think everything will be taken care of for them," he said.
"But they still need to be sure to review their portfolios and accounts from time to time to make sure things are performing properly and that the allocation stays on their preferred target.
"I would strongly argue that the target-date fund would do a much better job aligning with the investor's goals than the investor would do on their own," he said.
Cons Two negative aspects, Neblett said, are that most target-date funds are funds from one company, which may not have the top managers in each of the asset classes.