Are 401(k) Investment Menus Set Solely for Plan Participants?

Source: Veronika K. Pool, Clemens Sialm and Irina Stefanescu, Center for Retirement Research at Boston College, IB#15-13, August 2015

The brief’s key findings are:
• Mutual fund companies that are trustees of 401(k) plans must serve plan participants’ needs, but they also have an incentive to promote their own funds.
• The analysis suggests that these trustees tend to favor their own funds, especially their poor-quality funds.
• And 401(k) participants do not offset this bias by shifting their savings away from trustee-affiliated funds.
• In short, fund companies serving as trustees often make decisions that appear to adversely affect employees’ retirement security.