http://www.hrgumbo.com/2010/02/12/is-participant-choice-a-good-idea-in-a-retirement-plan/ Tue, 16 Feb 2010 00:00:35 +0000 http://wordpress.org/?v=2.9.1 hourly 1 http://www.hrgumbo.com/2010/02/12/is-participant-choice-a-good-idea-in-a-retirement-plan/comment-page-1/#comment-565 Roger Levy Tue, 16 Feb 2010 00:00:35 +0000 http://www.hrgumbo.com/?p=530#comment-565 Mr. Boercker lends his voice to a growing realization that reliance on participant direction to achieve the ERISA goal of retirement income security is failing. He cites ample proof and this is supported by other studies. Unfortunately, whether a 401(k) plan's investments are directed by participants or by professional managers is a matter of plan design for the plan sponsor and therefore not necessarily a fiduciary decision. But fiduciaries acting in the best interests of participants should encourage the plan sponsor to consider placing all investment decisions in the hands of professionals. Participant gravitation towards lifestyle and target date funds and the use of ETF's and index funds points to a growing desire to leave asset allocation to others. For many plan sponsors, it make sense to put participants out of their misery and remove their investment direction rights. For many, this will be the prudent thing to do. Mr. Boercker lends his voice to a growing realization that reliance on participant direction to achieve the ERISA goal of retirement income security is failing. He cites ample proof and this is supported by other studies. Unfortunately, whether a 401(k) plan’s investments are directed by participants or by professional managers is a matter of plan design for the plan sponsor and therefore not necessarily a fiduciary decision. But fiduciaries acting in the best interests of participants should encourage the plan sponsor to consider placing all investment decisions in the hands of professionals. Participant gravitation towards lifestyle and target date funds and the use of ETF’s and index funds points to a growing desire to leave asset allocation to others. For many plan sponsors, it make sense to put participants out of their misery and remove their investment direction rights. For many, this will be the prudent thing to do.

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