The decision to update our funds menu is a significant step toward providing a better retirement saving strategy for our 401(k) participants. We understand that this change may invite questions from your participants that we’d be happy to address.
This guide shares answers about why this is happening and what this may mean for individuals saving for retirement with Guideline.
Why is Guideline updating the funds selection?*
As an ERISA 3(38) fiduciary and a Registered Investment Adviser (RIA), Guideline has a responsibility to act in the best interest of our 401(k) plan participants. As part of this commitment, we routinely work to reduce investment fees where possible so that individuals can save more toward retirement.
The update to our funds menu helps reduce costs and encourage growth.
As a result of the changes, expense ratio costs will decrease by almost 50% to 0.04-0.16% (or up to just $16 annually for every $10,000 invested). For our six managed portfolios, the blended expense ratios will decrease from 0.064-0.070% to 0.064-0.067%.
Although these amounts may not seem substantial, asset-based fees can create significant drag on the growth of investments over time.
What are the specific changes you are implementing?*
To continue providing flexibility for our investors and upholding our commitment to low-cost investments for long-term growth, we will be replacing 17 of our higher expense ratio funds with 15 lower-cost funds of similar performance. To see a list of the fund changes, please see here.
Note that the funds we are removing will impact only a small percent of our existing customer assets.
When will the funds menu update go into effect?**
We will be migrating to the new funds between July 31 and August 11, 2023. No action is required by you or your participants (unless your participants want to change investment options prior to the change). However, participants can always revisit the Portfolio section of their participant dashboards to make changes to their investments.
Will participants also be notified or do I need to share this update myself?
Guideline is legally required to let all participants know about fund menu changes, whether it affects their current portfolios or not. We will be notifying all participants before June 30.
However, if you would like to provide information ahead of time, please feel free to do so. You can share this participant FAQ or our handout guide.
Will all participants be impacted?
The majority of these changes will only affect participants who have chosen to build a custom portfolio.
Participants invested in Guideline’s professionally managed Conservative or Moderately Conservative portfolios, will have just one of the components of those funds impacted. No other professionally managed portfolios will be affected.
Additionally, our current cash account will be moving to a federal money market fund.
Please note, the funds we are removing will impact less than 2.5% of the assets we manage.
Do participants need to do anything before the change?*
Participants do not need to take action for the updates to take effect unless they want to change their investments prior to the transition. Any assets invested within the funds we are sunsetting will automatically be reallocated to the respective successor funds based on the table here as part of the nightly account rebalance process.
If participants do not want their existing balances or future contributions transferred as outlined, or wish to make a different set of investment changes, they can access the Portfolio tab of their Guideline dashboards to make desired changes among the available alternatives before 4 pm ET on July 28, 2023.
Participants can always make changes to their investments any time before or after the migration, as well, by going to the Portfolio tab within their Guideline dashboards.
What happens if my participants take no action by the deadline?
There is no need for participants to take action. Any assets invested within the funds we will no longer support will simply be reallocated to the respective successor funds automatically based on the table here by rebalancing the portfolios as part of the nightly account rebalance process.
Are there any resources I can share with my clients or employees to notify them about the update?
Yes! If you are a Guideline partner (advisor, accountant, or benefits professional), feel free to share this FAQ, as it will be applicable to plan sponsors’ 401(k) plans.
Additionally, partners and sponsors can share the participant FAQ and handout guide, which provide information about the update. Otherwise, if you would prefer to leave the communications to us, rest assured, we will be notifying all participants by no later than June 30, 2023.
* This information is general in nature and is for information purposes only. It should not be construed as investment advice. Investing involves risk and investments may lose value. Consult a qualified financial adviser.
** This information is general in nature and is for information purposes only. It should not be construed as investment advice. Consult a qualified financial adviser.
The expense ratio information provided is accurate as of April 17, 2023. See our Form ADV 2A Brochure for more information about our fees.