Target date fund regulation may be just around the corner. So how should the mutual fund industry respond? At least fund chief welcomes the opportunity to guide the future shape of these increasingly popular asset allocation funds.

"We should not sit back and wait for the answer to come from Washington," Putam CEO Bob Reynolds said Thursday morning on the leadership panel at the ICI General Membership Meeting at the Marriott Wardman Park in our nation's capital. "We should be out in front of the issue, working with them."

Reynolds noted that the SEC already "dictates what the labels mean" for other types of fund asset classes, and he urged the ICI to "step into that void and fix the weakness" for target date funds, before it's too late.

"I predict you will the same type of regulation [from the SEC] in age-based funds," Reynolds said, "and I think it'd be a great idea."

Not everyone on the panel seemed as eager to help the SEC come up with new regulations for target date funds' asset allocations. Ed Bernard, vice chairman of target date fund giant T. Rowe Price, called the age-based products "one of the best innovations that the industry has ever seen" (Reynolds agreed) and pushed back against Reynolds' suggestions, quipping that "it depends on what the number is" that the SEC (or Congress) chooses for max equity allocations in 2010 funds, for example.

"The words I worry about are 'mandatory' and so forth," Bernard said. "We need to stay away from blanket solutions."

Capital Research and Management Company vice chairman (and panel moderator) Paul Haaga, LPL Financial chairman and CEO Mark Casady and Legg Mason president and CEO Mark Fetting joined in the fray. The panel also covered hot issues like guaranteed income, market turmoil and Disney's roll in financial education. 

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