Managed Accounts Give 401(k) Plans A Lift
The managed-accounts feature of 401(k) plans has done wonders for the bottom line of plan participants.
The managed-accounts feature of 401(k) plans has done wonders for the bottom line of plan participants, The Wall Street Journal reports, citing recent research. A number of studies found that when participants picked their own portfolio, they did such a poor job that they risked losing their retirement money. According to a recent Vanguard Group study, individuals tend to select investments that were either too risky, too conservative or inappropriate for their age or for what they need for retirement. Add managed accounts, and portfolios became more diversified with better results. An American International Group study found that the on average managed accounts grew 9.35% over a 12-month period vs. 5.35% for non-managed accounts. The downside, says the Journal, are the fees attached and the fact that participants no longer involved in the selection process.