Do-it-yourself retirement plan participants tend to be less diversified than those who participate in target-date funds. The Principal Financial Group looked at 2.4 million defined contribution plan participant accounts to see how the do-it-myself investors compared to TDF investors.
The research found that generally, do-it-myself participants were less diversified by asset class and number of investment options, rarely using automatic rebalancing to meet their investment goals, and at younger ages, frequently had much less exposure to equities.
Do-it-myself participants used an average of two to four investment options across the board, compared to the average 15 to 20 underlying investment options, representing a variety of asset classes, within the typical target date portfolios, the report found.
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