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

IB#15-13

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.

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