Advised 401(k) investors tend to stay the course: Morningstar


Amid the first quarter’s market volatility, 401(k) participants who used professional advice to help with their 401(k) plan investing were more likely to sit tight than self-directed investors, research by Morningstar Inc. found.

According to Morningstar, 5.7% of participants enrolled in a 401(k) plan as of Dec. 31 changed their portfolio allocations during the first quarter, although the rate of change varied significantly based on how the participant was invested. Only about 2% of participants in target-date funds and managed accounts changed their portfolios, while more than 10% of participants who self-direct their portfolios made changes.

Participants in professionally managed portfolio options who made a change to their portfolio tended to be older, with longer plan tenures, higher deferral rates, higher salaries, higher balances and more conservative equity allocations. Participants self-directing their accounts who made a change tended to be younger, with lower salaries and lower balances.

Participants closest to retirement made the greatest changes to their portfolios, and they tended to significantly reduce their equity allocation.

The percentage of participants who selected the default investment declined throughout the first quarter, primarily among older participants, Morningstar said in a release.

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