Portfolio Delegation and 401(k) Plan Participant Responses to COVID-19

37 Pages Posted: 15 Jun 2020

See all articles by David Blanchett

David Blanchett


Michael S. Finke

The American College

Jonathan Reuter

Boston College - Department of Finance; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: June 9, 2020


We analyze the behavior of 401(k) plan participants during the first quarter of 2020, when COVID-19 generated historic volatility, large negative returns, and significant unemployment. Only 2% of participants invested in TDFs made any changes to their portfolios, with even lower rates of change among those defaulted into robo-advised managed accounts, suggesting that delegation can decrease the likelihood of portfolio mistakes by less sophisticated participants. While 16.6% of non-delegated participants made portfolio changes, these changes were more likely among more sophisticated participants and appear not to have reduced participants’ quarterly returns. Consistent with liquidity constraints, however, withdrawals spike following job loss.

Keywords: 401(k), target date fund, delegation, robo-advice, COVID-19

JEL Classification: G11, G23, G41, G51, G53

Suggested Citation

Blanchett, David and Finke, Michael S. and Reuter, Jonathan, Portfolio Delegation and 401(k) Plan Participant Responses to COVID-19 (June 9, 2020). Available at SSRN: https://ssrn.com/abstract=3627506 or http://dx.doi.org/10.2139/ssrn.3627506

David Blanchett

QMA ( email )

Two Gateway Center
Sixth Floor
Newark, NJ 07102
United States
859-492-5637 (Phone)

HOME PAGE: http://www.davidmblanchett.com

Michael S. Finke

The American College ( email )

Bryn Mawr, PA 19010
United States

Jonathan Reuter (Contact Author)

Boston College - Department of Finance ( email )

Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics