In October 2017, Vanguard plan participants reached a tipping point: Half of all Vanguard participants are invested in a single target-date fund—and 57% are invested solely in a professionally managed allocation.
In June 2017, Vanguard issued the first How Australia Saves. Investment behavior is similar worldwide. Investors who choose professionally managed allocations have reduced the dispersion of risk and return vs. self-directed investors.
Since 2001, more defined contribution plans are adopting automatic enrollment and many are also implementing stronger savings rate defaults. Over 20% more people are saving in these plans. Meanwhile, the total savings rate has stayed the same.
As the baby boomers retire, there is growing concern about the potential financial exploitation of seniors. Early in 2017, the SEC approved rules enabling firms to obtain emergency contact information when opening an account.
The mischief and merriment we associate with Thing One and Thing Two offer a lesson for retirement plan sponsors: People counting on defined contribution plans need to get only two things right.