TDFs May Give Clients a False Sense of Security featuring Karen Blodgett

Financial Advisor IQ

Financial advisors who don’t work with retirement-plan sponsors often avoid TDFs because they consider the funds too generic to meet individual clients’ needs. Age is always a factor in determining asset allocation, but it’s not the only one, says Karen Blodgett, a principal at Aspiriant in San Francisco. “We implement a client’s asset allocation … at the portfolio level, not the account level,” says Blodgett, whose firm has AUM of $8 billion. That is, the glide-path approach may be fine in certain parts of a client’s financial plan but inappropriate in others. For example, TDFs’ time-based strategy might be useful in a 529 college savings program. “The rationale behind an asset allocation in a 529 plan doesn’t have nearly as many factors as building an asset allocation for a client’s overall portfolio to support all their financial goals and objectives,” says Blodgett.