The total number of retirement savers invested in a professionally managed allocation has more than doubled from 17% at the end of 2007, according to new study report published by Vanguard.
According to Vanguard’s ‘How America Saves 2013’, 55% of all participants will be entirely invested in a professionally managed investment option by 2017.
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The annual report says that 36% of all participants in 401(k) retirement plans at Vanguard in 2012 invested their plan assets in a professionally managed investment option.
The study report notes that 27% of all participants in 2012 were invested in a single target-date fund, 6% held a single traditional balanced fund, and 3% used a managed account advisory program. Furthermore, 14% of participants who were offered an investment advice service through their plan adopted one.
"The number of participants completely turning their portfolio construction over to a professional, or obtaining advice from professionals, is an important trend in the potential future financial security of retirees," said Jean Young, co-author of How America Saves.
"It represents a shift in responsibility for investment decision-making away from participants — many of whom may be inexperienced investors — to investment and advice programs that have been vetted by employers as part of their fiduciary obligations," Young added.
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By GlobalDataAverage plan account balances rose by 10% in 2012, to US$86,212, reflecting the effect of both ongoing contributions and market returns. For participants with a balance at both the end of 2007 and the end of 2012 — the median account balance grew by 67% for the same reasons. Nearly 90% of participants in this group saw their balances rise during this time, the report revealed.
