Out of Sight No More? The Effect of Fee Disclosures on 401(k) Investment Allocations
51 Pages Posted: 26 Dec 2018 Last revised: 18 Apr 2019
Date Written: March 30, 2019
We examine the effects of a 2012 regulatory reform of investment option disclosures on participants' allocations across 401(k) plans funds. We show that participants became significantly more attentive to expense ratios and short-term performance after the reform. The results are stronger for plans with larger account balances and those that are non-unionized. Additionally, they are not driven by secular changes in investor attention or sponsor-initiated changes to the investment menu before the reform.
Keywords: Defined Contribution, Expense Ratio, Performance, Mutual Fund, Flows, Participants, 401(k), Regulation, Disclosure
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