Life Cycle funds are becoming more and more popular in the retirement savings investment community. Read more about how they are constructed and used in this article, originally published in Retirement Counseling, Society of Financial Service Professionals (June 2006).

All of us have a fiduciary [1] responsibility to our clients, which is even more evident when working with qualified plan assets. As a fiduciary, the asset options available need to be diversified sufficiently to allow for any employee to elect a combination of assets that will give the employee a portfolio [2] that will meet his or her investment goals. Lifestyle and fund-of-fund mutual funds offer an opportunity to choose one fund to meet a particular goal. Does the investor believe that his or her goals will be achieved by the mere purchase of this style [3] fund? And, if goals are not achieved, will he or she understand that this was not necessarily the fault of the investment as much as a combination of time in the market, actual market return [4], inflation, and possibly an inaccurate analysis of the goal? At what point does fiduciary responsibility end and investor responsibility begin?