via Wall Street Journal
In investing, choice usually is a good thing. But new research suggests that having too many choices in a 401(k) retirement plan could be costly for participants.
Researchers studied a 401(k)-type plan that reduced the number of mutual funds it offered by close to half. They found that investors who were forced to shift their money out of the funds being eliminated from the plan tended to move into funds with lower fees—even though the funds available after the plan was streamlined had almost exactly the same range of fees as the menu of funds before the choices were reduced.
The estimated savings averaged more than $9,400 over a 20-year period for each participant who had to change investments, or $470 a year, says a report published last month by the National Bureau of Economic Research. (NBER is the organization known for tracking economic cycles, including declaring recessions.)
