September 2020

Out of Sight No More? The Effect of Fee Disclosures on 401(k) Investment Allocations

Mathias Kronlund, Veronika K. Pool, Clemens Sialm, & Irina Stefanescu


We examine the effects of a 2012 regulatory reform that mandated fee & performance disclosures for the investment options in 401(k) plans. We show that participants became significantly more attentive to expense ratios & short-term performance after the reform. The disclosure effects are stronger among plans with large average contributions per participant & weaker for plans with many investment options. Additionally, these results are not driven by secular changes in investor behavior or sponsor-initiated changes to the investment menus. Our findings suggest that providing salient fee & performance information can mitigate participants’ inertia in retirement plans.


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Last Update:
September 03, 2020