The research underscores the value of plan monitoring, and perhaps even the value third-party fiduciary advisors can bring to plans. (Photo: Shutterstock)
Plan sponsors have a clear legal obligation to monitor the quality of investments offered to retirement investors in 401(k) plans.
While that part of fiduciaries' obligations is indisputable, a small body of academic research on what happens when an investment option is removed in favor of another has shown that the new funds fail to outperform, and sometimes underperform, the removed funds.
One paper, published in the Journal of Finance in 2016, found no evidence that consultants' recommendations to replace investments resulted in added value to plan sponsors and investors in retirement plans.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
