Skip to main content

Simplified Options For Retirement Investments

Choosing investment options gets easier Sept. 1 when Duke introduces a new model to simplify decisions for faculty, staff

When enrolling in Duke's 403(b) retirement plan earlier this
year, Tonya Jolly-Ahearn wanted a simple option for investing her funds.

"I have so much on my plate," said Jolly-Ahearn, a nurse
practitioner for pediatric neurosurgery in Duke Hospital. "I'm a mom, I have a
full-time job, and I'm involved in various community interests."

Jolly-Ahearn consulted with a VALIC investment counselor and
chose a target date fund, which includes a diversified mix of stocks and bonds
that automatically adjusts to be more aggressive when she is younger and more
conservative as she approaches retirement.

"Duke has so many investment options that it's a little
overwhelming," she said. "Playing the stock market isn't for me. I found it
difficult to follow closely, so the target fund was a good option for me."

Jolly-Ahearn's perspective is not uncommon; Duke offers more
than 300 investment funds through five retirement plan vendors. But effective Sept.
1, choosing investment options will get easier when Duke introduces a new model
to help simplify investment decisions for all faculty and staff.

"While diversity and choice are good features to have in a
retirement plan, the multitude of options at Duke can be intimidating to many,"
said Kyle Cavanaugh, vice president of administration. "We are not eliminating
any funds or any current retirement vendors at this time. We are simply
organizing the funds into three tiers to simplify how the options are
presented."

Each of Duke's five retirement plan vendors
will offer investment options in the same three-tiered structure, providing faculty
and staff with the opportunity to build a diversified investment portfolio
without having to spread their investments over multiple providers.

The new model includes the following investment options:

  • Tier 1:
    Asset Allocation Funds:
    offer a way to make a single choice for retirement
    needs based on an individual's expected number of years to retirement through Target
    Funds, the option chosen by Jolly-Ahearn, or Balanced Funds, which offer a
    fixed exposure to stocks and bonds.
  • Tier 2:
    Core Funds:
    represent stocks, bonds and short-term instruments that have
    been carefully reviewed and selected as "best-in-class." These funds may
    represent a good option those who are more comfortable diversifying their own
    investments.
  • Tier 3:
    Other Funds:
    include all other funds offered by the plan that are not
    already represented in Tier 1 or Tier 2. These funds will not be monitored and
    participants are encouraged to regularly review the holdings and performance of
    these funds to ensure they remain in line with their investment strategy.

Cavanaugh said that Tier 1 and Tier 2 will be closely
monitored and reviewed annually by a new Investment Advisory Committee (IAC)
comprised of Duke faculty and administrators working closely with investment
experts to identify best-in-class funds with the lowest reasonable administrative
and investment fees.

"These changes do not require individuals to take any
immediate action, but we encourage faculty and staff to review the information
carefully to ensure they have invested in the options that are best for them,"
Cavanaugh said.