What’s changing?

Following an independent review by Wilshire, your plan’s legacy investment menu will be replaced with a streamlined lineup designed to make the investment experience easier to understand and more cost-effective for employees.

The updated lineup will include:

• Professionally managed target date funds and goal-based managed account options
• Low-cost index funds across major investment categories
• Actively managed investment options
• Institutional investment options and pricing, including Collective Investment Trusts (CITs)

Wilshire serves as the plan’s ERISA Section 3(38) investment manager for the selected investment options. In this role, Wilshire has discretionary authority to select, monitor, and replace those options, subject to the plan and applicable law. This helps reduce the fiduciary liability, investment-selection, and monitoring responsibilities carried by your organization.

Your plan design, provider, service agreement and fees, and access to Vestwell support will remain unchanged.

What can I expect to occur next?

On your effective date, as outlined in your communication from us, saver election for future contributions will be set to the plan’s Qualified Default Investment Alternative, or QDIA, as part of the transition to the updated lineup.

The QDIA is the default investment option selected for your plan during your registration on Vestwell. Depending on the selection made at that time, savers will be reinvested into either Age-Based Target Date Funds or Goal-Based Investing.

At that time, savers may log in to review the updated investment options and make changes to their elections. Savers who currently manage their own investment mix and wish to continue doing so may select their preferred options at that time. Savers who do not take any action, will continue to be invested in their plan’s QDIA.

Savers’ existing balances will stay invested exactly as they are now until your plan’s rebalance date as outlined in our communication, unless the saver updates their investment selections before that date. This creates a waiting period, giving savers time to review their options and make their own investment selections for existing balances.

During this waiting period, savers can choose new investments for their existing balance and their account balance will be moved to that new investment option once they do. That choice will also apply to any future contributions.

When the waiting period ends, if a saver has not already chosen new investments for their existing balance, their existing balance will also be moved into the plan’s QDIA. Savers can change their investment elections at any time. 

What key dates should I be mindful of?

There are two key dates related to this change - The effective date and the rebalance date.

• Effective date: this is the date you’ll see the new investment options in your Portal. 
• Rebalance date: this is the date that your existing and all future contributions will be moved to your plans Qualified Default Investment Alternative (QDIA), which your employer selected as the default investment option when a saver does not make their own investment selections.

Both are specific to your plan, please reference our email for the dates specific to your plan. Refer to your email for your plan’s effective date or contact us at clientsuccess@vestwell.com. Here's some key things to keep in mind when referencing those dates.

On your Effective Date:
Your plan's new investment lineup goes into effect. Additionally, any new contributions to the plan will begin being invested in the plan’s QDIA.

On your Rebalance Date: 
Unless your savers make a choice for their investments in the new line up prior to the rebalance date, the existing balances will be moved into your plan’s QDIA. If savers made new investment selections prior to this date, those selections will be used for their rebalance instead of the plan QDIA. 

Wilshire Advisors

Who is Wilshire Advisors and why were they selected?

Wilshire Advisors is an independent, third-party investment fiduciary, among the largest in the industry. As your plan’s fiduciary investment manager, Wilshire selects, monitors, and replaces (if and when needed)  the investment options in your plan. 

• Founded in 1972, serving defined contribution retirement plans since 1981
• Partners with 300+ institutional investors globally
• Oversees $1.5+ trillion in assets, including $1+ trillion for retirement plan clients
• Advises on $270 billion in defined contribution retirement plan  assets with $75+ billion in glidepath asset allocation solutions

Is Wilshire affiliated with Vestwell or Guideline?

No. Wilshire Advisors is a fully independent third-party fiduciary, not affiliated with Vestwell, Accrue, or Guideline. Their independence and their fiduciary role means their obligation is to act in your participants’ best interests when selecting and monitoring investments.

What does having an investment fiduciary mean for us as the plan sponsor (as known as 3(38)?

Having an investment manager like Wilshire means they are responsible for selecting and monitoring the plan’s investments. As a plan sponsor, you are always required to maintain general oversight of your plan, but Wilshire’s role reduces your fiduciary investment liability.

Will our fees increase because of Wilshire?

No. The entity providing investment oversight changed from Guideline Investments to Wilshire Advisors, but your plan’s service fees remain exactly as outlined in your service agreement. The investment lineup changes that Wilshire implemented reduce the fund-level expenses your participants pay.

Investment Lineup Change

Why is the investment lineup changing so soon after migration to the Vestwell platform?

Wilshire, as your independent investment fiduciary, completed its review of the investment options that were available to your plan when it was supported by Guideline and determined that a lineup redesign will benefit your participants. The Guideline lineup included a large number of Vanguard funds, which created unnecessary complexity, higher costs, and sector overlap with other funds in the lineup, which may have given participants a false sense of diversification. A large lineup also creates potential increased fiduciary risk for plan sponsors.   Additionally, Wilshire was able to leverage its market position to introduce less expensive index-tracking alternatives. In short, this lineup change is Wilshire doing exactly what it was engaged to do.

What is the new investment lineup structure?

The new lineup is organized into three tiers:

• Professionally Managed: Age-Based or Goal-Based Investing 
  • Professionally managed target date funds and goal-based managed accounts for savers who want a pre-built, less hands-on investment approach.
• Risk-Based Investing: Choose Your Risk Level
  • Professionally selected risk-based models where savers can select how much risk they want to take on while not having to select underlying holdings.
• Build It Yourself: Invest on Your Own
  • A range of index-tracking and actively managed funds for savers who prefer to choose and manage their own investment allocations.

How much will our participants save on index fund costs?

The new core index funds are less expensive than the comparable legacy Vanguard funds they replace. Expense ratios on funds in the new lineup include: 

• Equity Index Fund: 0.01% vs. 0.04% (69% reduction)
• US Bond Index Fund: 0.02% vs. 0.04% (50% reduction)
• International Equity Index Fund: 0.03% vs. 0.09% (67% reduction)
• Extended Market Equity Index Fund: 0.03% vs. 0.05% (40% reduction)
• Emerging Market Equity Index Fund: 0.08% vs. 0.13% (42% reduction)
• Real Estate Index Fund: 0.07% vs. 0.13% (50% reduction)

Lower investment expenses matter because the less paid in fund costs corresponds directly to higher returns and more of each participant’s savings can remain invested for retirement. 

What are CITs and why is the new lineup using them?

CITs (Collective Investment Trusts) are investment vehicles designed for retirement plans. They contain the same underlying investments as mutual funds, but because they are designed for retirement plans, they can often be offered at lower costs. Wilshire has leveraged its scale to negotiate institutional pricing, allowing you to access share classes of these funds typically available only to larger plans, passing those savings directly to your participants.

What happens to saver assets currently invested in the old lineup?

Savers will receive advance notice of the upcoming lineup change selected by Wilshire which outlines the effective date and the rebalance date. On the effective date, their election and future contributions will be moved to the default investment option selected by the plan sponsor when the plan registered on Vestwell. Once the update has been completed, participants can stay in the default investment option or select different investments at any time, without penalty. On the rebalance date,  if a saver has not already chosen new investments for their existing balance, their existing balance will also be moved into the plan’s Qualified Default Investment Alternative (QDIA). Savers can change their investment elections at any time.

As the plan sponsor, when you registered your plan on Vestwell, you selected your plan's QDIA from either Age-Based, which are target date funds, or Goal-Based investments, which is the managed account portfolios.

Wilshire’s new investment lineup includes Nuveen funds. Is there any relationship between Wilshire and Nuveen? 

Wilshire has partnered with Nuveen to create a new institutional target date portfolio series for your retirement plan. The portfolios use Nuveen’s underlying investments and asset glidepath, but are offered through an institutional structure designed for workplace retirement plans. This allows participants to access a similar investment approach at a 40% lower cost: 0.06% compared with 0.10% for the comparable mutual fund offering. Nuveen provides the investment approach and underlying strategies, while Wilshire is responsible for selecting, implementing and monitoring portfolios as the investment fiduciary. 

Why do some of the funds in Wilshire’s new investment lineup include limited investment performance history? 

Several of the CITs introduced by Wilshire in this change are new share classes of existing funds.  Wilshire was able to leverage its size and the aggregate assets of the Accrue plans to negotiate with fund companies for access to their funds at a lower cost.  When introducing a new share class, the fund company is not allowed to publish investment returns until the fund has assets for at least 1 month.  

Why are some investment options being eliminated rather than replaced? Does this mean fewer options? 

Some investment options may be removed without direct replacement because Wilshire's menu design philosophy seeks to minimize overlapping funds and reduce unnecessary complexity and “choice overload.” While the number of funds may decrease, Wilshire’s lineup maintains diversification and participant flexibility while creating a more efficient investment lineup where each option provides exposure to a distinct asset class, and participants can build diversified portfolios without having to choose among multiple similar funds.

What happens if employees don’t update their options after the change?

If employees do not make any other investment selections by the rebalance date, their existing and future contributions will remain invested in your plan’s default option, which is the Age-Based or Goal-Based investments. Regardless of which default investment option the plan sponsor selected, both are professionally managed portfolios.

Goal-Based Investing

We chose goal-based investing as our Qualified Default Investment Alternative (“QDIA”). What does that mean for our participants?

Participants will be defaulted into goal-based investing, which is our managed account feature.  The technology uses census data, including age, compensation (if available) and account balance—to invest participants into a portfolio of investment options selected by Wilshire Advisors. Read more about goal-based investing here.

We chose age-based investing as our QDIA. Will goal-based investing still be available to our participants?

Yes. Goal-based investing remains available as an optional feature for any participant seeking a more personalized investment experience, regardless of the plan’s QDIA election.

What does goal-based investing cost?

The employer pays no additional fee. Participants who choose goal-based investing pay 0.35% annually.  This fee is billed monthly, using the participant’s average daily balance for the days that they are enrolled in the goal-based investing feature. Participants who prefer target date funds or a custom allocation pay only the underlying fund expense ratios, with no managed account fee.