Just how impactful have investment product and plan design innovations been on the savings habits of participants in employer-sponsored retirement plans? This year's How America Saves study from Vanguard—which could just as well be titled How America Has Improved the Way It Saves—sets out to put a fine point on the role managed products and automatic enrollment have had on the 4.9 million participants in the fund manager's recordkeeping business. When Congress passed the Pension Protection Act of 2006, it set a direct course for automatic enrollment, target-date funds, and other professionally managed options for savers. More than a decade out, the virtues of the legislation—or at least its provisions relative to the defined contribution market—are hard to refute. By no means are those virtues without controversy. Over the bull market, some have criticized TDFs for assuming too much equity risk for near-retirement vintages. Implicit in the criticism is that fund managers have added equity exposure to juice returns and make their products more attractive. Others have claimed it is a straight revenue grab: Underlying equity funds in TDFs yield higher fees for managers than fixed-income funds. Whatever the merits of those criticisms may be, the impact of managed products—and auto-enrollment—on improving not just participation rates but asset allocation habits is irrefutable. Vanguard found that when participants construct their own portfolios, 10 percent hold "extreme" allocations—defined as either 0 percent or 100 percent in equities. Since the advent of TDFs, by comparison, three-quarters of Vanguard participants now have broadly diversified portfolios, up from 50 percent a decade ago. Vanguard has clearly benefited from the TDF revolution. For the past several years it has stood atop the TDF industry, holding more than $650 billion in assets. In 2017, 54 percent of all cash flow to TDFs went to Vanguard's series, according to Morningstar. Here are 10 takeaways from this year's How America Saves Report. BenefitsPRO related reading: Backup plan needed for retirement savings strategy Retirement saving checklist: 15 things to know that can lead to success
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