401(k) plans have been sold backwards since the beginning. Orginally they were a supplement to a oension plan, now they are the sole source of retirement for most Americans. Model portfolios should be automatic and then the participant can opt out and choose their own mix of funds.

A separate survey of 401(k) participants finds that relatively few have the desire to manage their own workplace savings plan. Koski Research, on behalf of Schwab, surveyed more than 1,000 workers enrolled in 401(k) plans across the country and found that:– More than half (52%) say they don’t have the time, interest or knowledge to properly manage their 401(k) portfolio.

— Nearly three-quarters (73%) spend less than eight hours per year managing their 401(k) plan account.

— Many (56%) do not review plan-related education materials they receive.

— Nearly one-third don’t know they pay any fees for their 401(k) plan. Of the 70 percent that understand they pay some sort of fees, 95 percent don’t know about investment fund operating expenses, and 67 percent don’t know about plan administration fees.

— A significant majority (83%) say they are interested in receiving professional investment management from their employer. However, this interest does not translate into action based on Schwab data that shows just one in 10 participants actually takes advantage of 401(k) investment management advice when it is offered(2).

There will continue to be attention paid to the retirement crisis in America. We must provide employees with the prudent tools to accomplish their retirement planning needs. If not the government will.

Please comment or call to discuss how this affects you and your company.