The Response of Tiaa-Cref Participants to Software-Driven Asset Allocation Guidance

Abstract

This paper examines the response of a large group of TIAA-CREF retirement plan participants to participation in an asset-allocation guidance session in which a software-driven allocation tool plays a major role. Several aspects of the "treatment effect" of the guidance session on individual asset allocation are discussed and analyzed. The paper also presents a description and analysis of the responses of participants to the queries posed by the software-based asset allocation tool, as well as the tool's output. The guidance sessions are shown to have a significant, positive impact on the likelihood that participants will reallocate assets or begin directing contributions to recommended investment accounts that they were not using prior to the guidance session. While the majority of participants do not appear to adopt the exact advice recommendations, the changes they make to their investment allocations appear to be positively related to the recommendations received. In addition, the data show strong gender-based differences in participant responses to the software's interrogatory questions.