This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The New Retirement Rulebook

Kelli B. Send, senior vice president for Francis Investment Counsel -- which offers investment advisory services to plan sponsors as well as education and individualized advice services to plan participants -- says many 401(k) plans do not "offer the kind of portfolio or the kind of investment options that they really should today. " When they do, international exposure is usually too Eurocentric.

"What we typically see is an average in the industry of 10-12 funds and maybe one international," she says. "Well, we know what has happened to the traditional international option. It has gotten hammered in 2011 because it is so focused on Europe."

Send says that 401(k) menus, as they have been pared down for simplicity's sake, need to be rethought and include alternatives, hard assets, commodities, emerging-market equities and emerging-market fixed income.

"You not only have to add them to the plans, you have to educate the employees on how to use them," she says. "The standard asset allocation models out there today still do not include those types of choices."

The average 401(k) investor's exposure to international funds is just 8% of assets, according to a study conducted by Vanguard. According to the Callan DC Index, retirement plans had less than 0.5% of plan assets invested in emerging-market equity funds.

In making sense, and returns, from the current investing environment, participants need options and the wherewithal to use them.

"So much in behavioral finance is about the inertia out there," Send says. "Once people check mixes they tend to stick to them. There is a fine line between long-term investing and neglect. What happens is people pick a mix when they are 30. Now they are 52 and they are finally going, 'Oh I'd better make some changes.' It's crazy that with the demise of pensions people just do not know what to do and the industry really hasn't figured out a way to really help people drive change. Even when you offer the brochures and the newsletters full of advice , people don't change their mix."

"The problem is twofold," she adds. "The employer really has to offer new-world thinking with their portfolio choices, but then the participant has to be given help to get them implemented."

4 of 5

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs