A new survey from Buck Consultants concludes that 401k education is encouraging workers investing in the plan to seek out more aggressive opportunities.

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Buck Consultants

Of the 646 sponsors questioned, 60% with education programs reported higher investment contributions, and 58% with education programs reported that employees were becoming less conservative in their investment choices.

Approximately 89% of employers with 401(k) plans have instituted some kind of educational program. Further, 28% are looking at ways to automatically enroll employees. This may be because the number of eligible employees investing in 401(k) plans remains at 77%, its level for the past six years.

How did participants invest their savings? 468 of the sponsors questioned responded. The results are as follows:

HOW PARTICIPANTS INVESTED
Investment Type	Percentage Offering Option	Average % of Assets Invested	% Held in Mutual Funds
Equities
Company Stock	33.80%	28.10%	N.A.
Index Fund	60.50%	18.90%	82%
Growth Stock	84.80%	33.30%	87%
Small Cap Stock Fund	52.60%	9.50%	88%
International Stock Fund	70.70%	6.00%	90%
Bonds & Money Markets
Managed Bond Fund	42.10%	6.40%	87%
Passive Bond Fund	16.00%	5.80%	82%
US Gov't Securities	25.00%	6.70%	72%
Money Market Fund	52.40%	9.60%	80%
Balanced
Balanced Fund	67.90%	15.40%	86%
Lifestyle Fund	17.10%	15.10%	77%
Other
Stable Value Funds	55.10%	23.20%	6%
Mutual Fund Window -- Type 1	0.90%	100.00%	100%
Mutual Fund Window -- Type 2	4.70%	22.60%	100%
Self-Directed Brokerage Account	3.20%	14.10%	18%
Other	28.60%	10.70%	46%

*Data provided by Buck Consultants.
For Investment Options through year-end 1997.

Another factor that could have helped participants to invest more aggressively is the percentage of plans that allow daily changes in investment selection. 71% of those surveyed have a daily selection process, up from 61% in 1997 and 28% in 1994. The consulting firm also noted that on average sponsors offered employees ten investment options.


 

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