. . . “The [Schwab 2013 401(k) Participant Survey] is ostensibly about 401(k)s, but really I think it’s about asset allocation,” says Aron Gottesman, a professor of finance and chairperson of the Finance and Economics Department at Pace University’s Lubin School of Business. “Your typical individual is faced with a menu of funds in which to invest and they are unsure how to do so appropriately. The whole thing is highly confusing.”
The source of the confusion, Gottesman asserts, is that there are two different philosophies behind investment practice: market timing and the modern portfolio theory. Both, Gottesman argues, are tricky to understand, let alone master. While Gottesman is less interested in the retirement space and more passionate about topics such as ETFs, his insight is applicable to the 401(k) industry. It all comes down to using a financial advisor and to fostering a relationship with that counsel.
Read the article: 401kWire