Decisions, Decisions, Decisions: The Effect of Choice on Investing BehaviorPosted July 21st, 2011
In a world where 24 hour, on demand access to millions of consumer products is available via the Internet, you may expect that modern investors thrive when given a broad spectrum of investment choices. But recent research into investor decision-making is finding that more is not better.
Investors faced with too many choices become paralyzed and make bad decisions—according to a recent study from Columbia Business School and the University of Chicago Booth School of Business. [Choice Proliferation, Simplicity Seeking, and Asset Allocation, Sheena S. Iyengara & Emir Kamenica] These results expand on previous research that found that employees are less likely to enroll in an employer retirement plan with too many investment choices.
Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).
For previous coverage of 401(k)s in Advisor’s Journal, see The Department of Labor Releases Final 401(k) Disclosure Rules (CC 10-82)
For in-depth analysis of 401(k) retirement plans, see Advisor’s Main Library: Section 17.5 401(k) Plans.