October 16, 2012
has found that whether plan participants consider themselves “active” or
“accidental” investors, they give target-date funds (TDFs) praise.
Thirty-eight percent of participants surveyed called
themselves active investors—noting that they started saving early, have
confidence about their current financial situation and actively manage their
investments or the managers that invest for them. Sixty-two percent of
participants consider themselves accidental investors, unenthusiastic about
saving and investing, insecure about their current financial situation and
lacking confidence in any investment ability.
Among both groups, TDF usage is at an all-time high: 39% of
actives said they use TDFs (up from 29% in 2009) and 27% of accidentals said
they use them (up from 21% in 2009). In addition, 87% of actives and 72% of
accidentals said they are equally or more satisfied with their TDFs than with
other investments in their plans.
Active investors feel comfortable with their investment
choices and their retirement in general with TDF’s asset-allocation options.
Accidental investors like the simplicity and ease of TDFs.
Joe Healy, head of AllianceBernstein’s Defined Contribution
Client Experience, commented: “It’s striking that despite the almost polar
opposite behavioral differences between active and accidental investors, both
groups give TDFs high marks. It certainly suggests that sponsors can stave off
behavioral biases and encourage savings by defaulting people into
easy-to-understand investment solutions like TDFs that also provide
sophisticated asset-allocation features to satisfy savvy investors.”