As we work to implement thoughtful plan design structures and to ensure participants receive adequate opportunity for investment diversification, it’s helpful to study how participants are using various plan features. Further, it’s helpful to assess the trends and examine the direction participants’ actions are headed.
Each year Vanguard publishes one of the most insightful retirement plan report, which it titles “How America Saves”. A FINRA (Financial Industry Regulatory Authority) representative studied this year’s report and assembled a concise summary of six American savings trends. We think it’s worth three or four minutes to read his summary, which addressed the following trends:
(1) A record number of Americans saving automatically;
(2) More participants having money in professionally managed fund options;
(3) Much higher allocations to equities than in the past;
(4) Participants diversifying away from company stock;
(5) Participants trading less often; and
(6) Participants beginning to save more than one might think.
Taken together, those seem to be positive trends. Although plan design features and investment options do not come in a one-size-fits-all package, the trends and currently available tools provide a great starting point to construct the right package for your company’s employees.