And what, exactly, is the problem? While it may be frustrating for financial services companies looking to benefit from transaction fees, it seems 401(k) participants are doing exactly what they should.
According to the Aon Hewitt 401(k) Index, November was another slow trading month in defined contribution plans with no days of above-normal trading activity. July 2015 was the last month without any above normal days, meaning 401(k) participants are heeding advice to leave retirement savings alone.
However, in a bit of a head scratcher, target-date funds accounted for almost 60 percent of asset class outflows. Participants favored fixed income over equities when they made trades. In November, 60 percent of the trading days showed more inflows to fixed income.
After combining contributions, trades, and market activity, the overall equity allocation in participants’ accounts rose to 65.6% at month-end, up slightly from 65.5% at the end of October. Future contributions to equities increased to 66.4%, from 66% in October.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
