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Simplify with a managed 401(k)

Retirement investors who crave simplicity are getting their wish. After years of mounting complexity, 401(k) accounts are headed in the other direction. Employers are increasingly offering workers the option of a managed 401(k) account — a turnkey savings solution that does all but spend the money for you.

"In the past three years, a lot of people found out that investing takes a tremendous amount of work and that they don't want to do that work," says David Wray, president of the Profit Sharing/401(k) Council of America.

Enter the managed 401(k). Check the box on your enrollment form, supply some information about your assets and retirement plans, and you'll be automatically invested in a diversified mix of funds that most match your goals. Your holdings will then be rebalanced quarterly.

In some cases, your contributions will automatically increase every year, up to a preset maximum. As gold-watch day approaches, your investments automatically turn more conservative. Going automated will cost anywhere from 0.1 percent to 0.8 percent of assets — a bargain considering the 1 percent of assets that private money managers charge.

Not surprisingly, workers everywhere are checking that box.

"Where it's been introduced, 75 percent of new hires are signing up," says Wray, who expects such managed-account offerings to be standard within five to 10 years. Some 22 percent of retirement-plan sponsors now offer some form of a managed 401(k).

Susan Hudson, 57, a switchboard operator at J.C. Penney in San Bruno, Calif., used to keep half her retirement account in J.C. Penney stock and half in a low-yielding money-market selection — two all-too-common 401(k) no-nos. Since enrolling in the retailer's pilot managed-account pro-

gram last year, Hudson's account includes a diversified mix selected from the company's 23 fund offerings by Financial Engines, the Palo Alto, Calif., outfit known for its computer-generated financial advice.

"I know very little about stocks," Hudson says. "But I've made money that I wouldn't have made if I was just collecting interest income."

The biggest surprise, sponsors say, is how many affluent investors are signing up for the service.

"This program was designed for the uninvolved and overwhelmed. But the biggest success is with people in the upper-middle income brackets," says Keith Sykes, defined-contribution product manager at Wachovia Retirement Services.

"They've got kids playing soccer, and they work 40 to 50 hours a week. They recognize the benefits of professional management."

Or, at least, of keeping things simple.