• Bio

Grant Blindbury

Grant Blindbury has been working in the Investment Advisory industry since 2003 managing assets of affluent individuals and pension plans. Grant earned his bachelor's degree in Business & Economics at the University of California at Los Angeles (UCLA) in 2001. Grant specializes in working with clients approaching or entering retirement and positions them for success by coordinating their most important financial affairs. Grant's goal, as his client’s personal CFO, is to deliver both the financial outcome and experience necessary to accomplish their most important goals. In 2007, Grant earned the professional credential CERTIFIED FINANCIAL PLANNER™ (CFP®). He is president of his local Estate Planning Council and participates in multiple professional learning groups. He is on the Board of Directors for Big Brothers Big Sisters of Ventura County as well as being a “Big” himself. From the outset he was drawn to the client-centric model that fee-based advisory services provided and joined forces with Fields Financial Associates, Inc. He would later partner with the founders of Fields Financial Associates to form FMB Wealth Management. He has been a licensed Investment Advisor since 2003.

Target date funds were first designed in the early 1990s specifically with the simple retirement planners’ needs in mind. Target date funds are basic collective investment funds that become increasingly conservative as an investor’s target date – most often his or her retirement date –approaches. When an investor’s target date is long into the future and his or her risk tolerance is higher, asset allocations are weighted more heavily in higher risk, higher expected return investments like equities. As one’s target date draws near and capital preservation becomes paramount, the fund becomes increasingly conservative in nature with investments favoring asset protection vehicles, such as government bonds.

Today, more than $1.1 trillion in assets are invested in target date funds, and financial research firm Brightscope expects that number to rise to a whopping $2 trillion by 2020. Since the 2006 Pension Protection Act, target date funds have become the default option in many defined contribution plans, 401(k)s and 403(b) plans. Target date funds have also become a more popular choice among individual investors in their own IRAs as well.

The greatest appeal of this “set it and forget it” investment tool is that it is a managed investment strategy that can be set and left for long periods of time without putting much thought or effort into it. While this “one-size-fits-all” strategy is not the optimal tool for most, it is likely better than nothing.

“What I’ve learned from behavioral economists is that people are more likely to spend more time figuring out what carry out meal they want on a Tuesday evening than they are on the allocation of their portfolio,” said Tim Maurer of Bam Alliance. “If you don’t intend to do anything, and you’re honest enough with yourself to admit that, absolutely use a target date fund.”

The Pros and Cons of Target Date Funds

The best thing about target date funds is that they are better than the alternative, which is to do nothing. Before 2006, employees who chose not to elect specific investment options in their 401(k) plans would have their funds automatically directed toward no-growth money market accounts. By making target date funds the automatic option in retirement accounts, employees can rest assured that they are headed in the right direction at the very least. While they are not optimized for each individual’s needs, target date funds take the guesswork and confusion out of investing for those seeking a simple savings strategy or are just starting out. Employees simply set a date and the fund takes care of the rest.

Some of the benefits of target date funds include the stress-free automatic diversification and asset allocation that is achieved through the fund by default. For young, first-time investors, target date funds can be a great way to get them in the habit of saving for retirement and learn about these basic and important lessons early on.

This age-based strategy follows a widely accepted approach that – while not customized to your individual needs, risk tolerance and savings goals – generally won’t lead you too far astray on your retirement savings path.

Target date funds may also be effective in certain savings vehicles, like 529 plans, where it is unlikely that an investor will take the time to reallocate the account each quarter. Where target date funds are proven to be least effective, however, is for those in their 40s and 50s who are nearing retirement. At this stage in life, when one’s savings needs are more dynamic and complex, target date funds might not offer the level of customization they need.

Target date funds can be restrictive as they include only funds from their own fund families. Additionally, target date funds treat age as the only factor in one’s risk tolerance. While, in theory, one’s risk tolerance generally diminishes as the person nears retirement, an optimal savings strategy should take into account the entirety of one’s goals and needs, which is vastly different for every person.

While target date funds can be a great starter tool for those just beginning, investing according to your individual savings needs and risk tolerance – not just your age – is the optimal way to effectively meet your savings milestones. If you are invested in target date funds, it might be time to reassess your portfolio and identify the right custom tailored solution to meet your distinct savings needs.