Michael Sebastian, Chief Investment Officer
The hybrid qualified default investment alternative (hybrid QDIA) is a retirement readiness innovation that is growing rapidly in adoption. Here’s a quick overview, a discussion of how hybrid QDIA is gaining momentum with plans, and some next steps.
Hybrid QDIA is a holistic, dynamic, personalized retirement solution that utilizes two investment options: (1) a low-cost target date fund (or customized target date portfolio) investment, and (2) a managed account. Participants begin in the target date fund investment solution before automatically adding on managed account services when they reach a specified milestone, such as a certain age (or choose on their own to upgrade to managed account services.)
When Hybrid QDIA serves as the default investment option for a retirement plan, it provides planning for everyone regardless of the investment option. Being the default maximizes value added potential for all participants, enabling mass enrollment and engagement. In this way, it reaches all participants--early-, mid- and late-career, everyone has a plan. Additionally, the methodology and user experience are consistent throughout the participant’s career.
More recordkeepers are deploying, or planning to deploy, this functionality. More advisory firms are finding a hybrid solution attractive as their primary default QDIA; hybrid QDIA helps increase the strength of the plan sponsor-advisor relationship while improving participant outcomes.
We see anecdotal evidence among leading recordkeepers and plan advisors that hybrid QDIA represents one-third or more of new plan sales, and is trending higher.
Hybrid QDIA unlocks full value for participants, providing retirement awareness, the benefits of personalization, and a plan for everyone, in a cost-effective way.
A few common questions to consider:
Interested in learning more about Hybrid QDIA? Reach out to firstname.lastname@example.org