LINCOLNSHIRE, Ill. -- Despite widespread claims that 401(k) investment education is effective, 40% of employers claim plan participants are still too conservative, a new survey by Hewitt Associates, Lincolnshire, shows.
Investing too conservatively is cited as participants' most common investment mistake, although the percentage is down from 53% in 1995.
Still, the survey found 93% of employers contend investment education efforts have been successful.
Other participant mistakes, according to Hewitt, include not adequately diversifying investments (17%) and focusing on short-term investment results (12%).
Also, the survey found 401(k) participation has increased only slightly -- to 79% in 1997 from 75% in 1993.
And, the survey says, 52% of employee contributions are directed to employee stock funds, where the option is available, up from 36% in 1995. Hewitt found 25% of total 401(k) plan assets are invested in company stock, slightly more than the 24% invested in stable-value funds. Only 26% of plans require that matching contributions be invested in company stock.
The survey found that only 55% of plans have written investment policy statements for their 401(k) plans; 13% indicated they plan to write them in the next year.
Plan sponsors said investment performance is the factor considered most important in selecting investment options for their plans; fees and expenses were mentioned as second.