JPMorgan Asset Management has proposed that 401(k) plans cut the number of investment choices they provide employees and change to a new simpler structure, Reuters reports. At present, a 401(k) plan typically offers more than 18 investment alternatives in addition to several target date funds, in which new members are automatically registered, as per McKinsey & Co.
According to J.P. Morgan’s plan, employers would continue to routinely enlist new members into target date funds. However, instead of offering those who opt out an array of more than 18 funds to choose from, J.P. Morgan proposes a choice of three investment buckets. The three buckets would be one that allocates to a diversified portfolio of equity funds, one that invests in bond funds and one that allocates to cash alternatives, such as stable value funds and money market funds. J.P. Morgan is a global leader in asset and wealth management services serving institutional, high net worth and retail clients.
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