SURVEY SAYS: Are You Using an Asset Allocation Solution?

But the reason for both is that these solutions have proven to be extraordinarily popular investment choices for participant-directed retirement plans.  

This week, I asked readers if their retirement plan offered some kind of asset allocation solution – how that was working out – and if they had invested all/any of their retirement savings there?

The vast majority of this week’s respondents (nearly 89% ) had some kind of asset allocation solution on their menu – in fact, nearly one-in-five said they offered more than one type.   Roughly one-in-ten said they didn’t offer the option, while roughly 2% said “not yet.”

Have YOU Invested There?

Having said that – less than half ( 48.5% ) of this week’s respondents had invested their balances there.   While 17% had put 100% in those options, nearly a quarter ( 24.2% ) intriguingly said that they had put money there – but less than 100% of their retirement plan balance.  

Now, I know what some of you are thinking – but there were reasons proffered for that distinction; “Other than Company Stock match, 100% invested in a Target Fund,” noted one, while another said, “All my “new money” goes into a target date fund, but haven’t moved existing balances” (several noted that situation, by the way).

One reader explained his decision by noting, “I guess I have a gambler’s heart, or maybe I am just greedy.”

As "bonus" questions, I asked about asset allocation performance and fees.    On the former, a strong plurality, 39%, said their plan's asset allocation solution was performing "as expected", while nearly a quarter ( 23.7% ) said "good."   One-in-ten went so far as to say "great!."   Just 4% said "not so good" or indicated that they were looking to make a change, while 8.2% said "who knows?" (by the way - not necessarily a bad thing.   As one reader noted, "I can't say how it has been performing as compared to other funds and indexes but that is why I have my money there." ).  

About one-in-eight chose "other", mostly either because the choice wasn't available, because the choice hadn't been in place long enough to provide a good sense, or as one reader noted, "Depends on who you are talking to - the guys who manage the funds say its "great". Those of us who can read a prospectus have our doubts.....".

Fees

There was a positive reaction on fees as well - just over a third said they were satisfied with the fees paid relative to value received (one reader noted, "The expense ratio of my asset allocation fund is 19 BP. Other than index funds, I can't find investments with that low of an expense. In addition, it means I don't have to worry about diversification, rebalancing, etc... I love the hands off feel of the fund."  Another noted, "..it's hard to be dissatisfied with the fees of our target funds when the expense ratios are 19 to 21 basis points and lower than any of our individual fund offerings. Makes you wonder if this is really all the cost, but then the feds are wondering that also…" , while nearly a quarter said they were very satisfied with that combination.   A nearly identical 23.3% said they were "more or less" satisfied with the fee/value proposition, though 6% said "no" (the rest were "not applicable" situations).   In fact, one reader noted, "Fees are why I don't invest in the funds."

Still, this week's Editor's Choice  goes to the reader who noted, " These are our proprietary funds. I know the guys who manage them. I'd rather keep my money in a shoe box under my bed than give it to them."

Thanks to everyone who responded to our survey!