Access to Asset Allocation Funds Widespread

A Spectrem Group research report, Participant Asset Allocation Trends: Target Date and Lifestyle Funds, said of the 59% who could choose one of the immensely popular funds:

• 14% had access to lifestyle options,
• 9% could opt for target date portfolios, and
• 36% had both as options.

Spectrem said of participants with asset allocation option access, 39% have no money in them and 22% have invested a portion of their accounts in those choices. Of the participants that do not currently have an asset allocation fund available to them, only 9% indicated they were “likely” to invest in them if they were made available, while 21% said they were “unlikely” to choose them. Forty one percent said they did not know.

Some 59% of participants said their whole investment approach has not changed in the last several years, while 24% have become more aggressive and 17% more conservative.

Spectrem said participants were asked to rate various fund selection criteria on a scale of importance, and the top four were:

• Fund expenses – 64%,
• Past performance – 60%,
• the specific companies in which the fund invests – 60%, and
• the fund’s risk level – 60%.

Asked to specify only one most important metric, past performance was the clear winner (41%), while the guarantee of a minimum return was second (17%). Fund expenses came in second to last at 6%.

The Spectem poll also measured the extent to which participants were willing to take the investment reins themselves or would feel more comfortable taking the reigns. Forty eight percent (48%) have “some” interest in managing their personal finances and investments while 22% were “very” interested. Four percent were “not at all” interested.

Ten percent of participants reported they view themselves as “very knowledgeable” about finance and investments and 51% consider themselves “somewhat knowledgeable.” Eight percent indicated they consider themselves total novices.

A total of 400 plan participants were surveyed online during January and February 2007.