Financial assets make up one component of retirement planning. But as part of our total financial picture, human capital, housing wealth and pensions have exposures to different asset classes and risk factors. What happens when we consider these when creating portfolios?
New research from the Morningstar Investment Management group, "No Portfolio Is an Island," explores the implications of taking a total wealth perspective for retirement plan participants. The optimal allocation of financial assets varies substantially — exceeding 20 percent in many simulations — based on different total wealth risk exposures. This indicates there is no single set of portfolio weights for all industries and regions, and that allocations should vary based on unique plan demographics.
The research suggests that plan sponsors interested in building custom target-date solutions should consider the industry-specific human capital, region-specific housing and other types of risks unique to their participants to reach a higher level of customization.
Register now to join the discussion on this important topic and learn how Morningstar Associates incorporates these findings into our customized portfolios.
Attendees will learn:
- How more customization can help lead to better participant outcomes.
- How human capital can inform asset allocation decisions.
- Why we should customize target-date models by industry and region.
David Blanchett - Head of Retirement Research, Morningstar Investment Management
David Blanchett is head of retirement research for Morningstar Investment Management, a unit of Morningstar Inc. In this role, he works to enhance the group’s consulting services and conducts research primarily in the areas of financial planning, tax planning, annuities and retirement planning.
Blanchett's research has been published in a variety of academic and industry journals and featured in publications such as InvestmentNews, Kiplinger’s Personal Finance, MarketWatch, Money, PLANSPONSOR, and The Wall Street Journal. His research on distribution portfolios won the Journal of Financial Planning’s 2007 Call for Papers, and his research on retirement withdrawal strategies won the Retirement Income Industry Association 2012 Thought Leadership Award. In 2014, Money named Blanchett one of the five brightest minds in retirement for his research on retiree spending patterns. He is a RetireMentor for MarketWatch and an expert panelist for The Wall Street Journal.
Prior to joining Morningstar in 2011, Blanchett was director of consulting and investment research for the retirement plan consulting group at Unified Trust Company in Lexington, Kentucky.
Blanchett holds a bachelor’s degree in finance and economics from the University of Kentucky, a master’s degree in financial services from The American College and a master’s degree in business administration from the University of Chicago Booth School of Business. He is pursuing a doctorate in personal financial planning from Texas Tech University. Blanchett holds the Chartered Financial Analyst, Certified Financial Planner, Chartered Life Underwriter, Chartered Financial Consultant and Accredited Investment Fiduciary Analyst designations.
Jeremy Stempien - Director of Investments, Morningstar Investment Management
Jeremy Stempien is director of investments for Morningstar Investment Management, which provides comprehensive retirement, investment advisory, portfolio management and index services for financial institutions, plan sponsors and advisers around the world.
Stempien is responsible for developing asset allocation programs for plan providers, plan sponsors, mutual funds and insurance and money management companies. He also heads custom target-date services, working with clients to create custom glide paths, select appropriate asset classes, construct model portfolios, perform manager/fund selection and quantitative and qualitative due diligence, and recommend solutions or changes to client products, services and deliverables.
Prior to joining Morningstar in 2005, Stempien spent more than five years at Hewitt Associates as a defined contribution project manager. He managed client relationships with 401(k) plan sponsors and oversaw more than $2.5 billion in 401(k) plan assets.
Stempien holds a bachelor’s degree in finance from St. Louis University and a master’s degree in business administration, with a concentration in finance and investments, from the University of Notre Dame.
Nathan Voris - Large Market Practice Leader, Morningstar Investment Management
Nathan Voris is large market practice leader for Morningstar Investment Management’s retirement solutions team. Morningstar Investment Management provides comprehensive retirement, investment advisory, portfolio management and index services for financial institutions, plan sponsors and advisers around the world. Voris works with a team of investment, client service and sales professionals to develop business and client strategy in the defined contribution plan sponsor marketplace.
Previously, Voris was a consultant with R.V. Kuhns & Associates, where he worked with defined contribution plan sponsors to improve asset allocation and solve other needs of plan participants. Before that, he was an investment consultant for Morningstar Investment Management. In that role, Voris was responsible for all aspects of portfolio construction, including asset allocation and manager selection/due diligence for plan sponsors, retirement plan providers and asset managers. He began his career working for defined contribution plans, including Wal-Mart and the Ohio Public Employees’ Retirement System.
Voris holds a bachelor’s degree in education from the Ohio State University.