Participants in 401(k) plans are largely passive players, according to a study by the Pension Research Council at the University of Pennsylvania. The research report found that 80% of owners of accounts held by The Vanguard Group in 2003 and 2004 made no trades during that time, with only 10% making one. One explanation, according to the study, is that “portfolio inertia identified here suggests that participants may require additional help managing their portfolios.” Companies apparently have responded to that need by offering lifecycles funds, automatic rebalancing services and managed accounts, which charge a fee for the service. The good news, according to the authors, is at least participants are not making risky trades.
