TDFs Praised by Different Types of Participant Investors

October 16, 2012 ( – AllianceBernstein has found that whether plan participants consider themselves “active” or “accidental” investors, they give target-date funds (TDFs) praise.

By Rebecca Moore | October 16, 2012
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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.”