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Rekenthaler Report

The Future of 401(k)s

Moving in the right direction.


The New Breed of 401(k)
Vanguard just published a nifty little 95-page document entitled "How America Saves 2013: A report on Vanguard 2012 defined contribution plan data." Light reading the document is not; there's a reason why it took Vanguard until June to release its 2012 edition. However, the paper is a great source of data not only on where the 401(k) industry stands today, but also on where it is heading.

(It's true that Vanguard is atypical among 401(k) suppliers, as the company features much lower costs and more index investing than do its competitors. However, with $500 billion of the defined-contribution market's $4 trillion, Vanguard is large as anomalies go. It's not the tiny exception that proves the rule. Also, while Vanguard tends to be off by its lonesome with costs and indexing, it is 401(k) mainstream in other aspects. If Vanguard is experiencing a trend, you can bet that the rest of the industry is experiencing it, too.)

John Rekenthaler has a position in the following securities mentioned above: MORN. Find out about Morningstar’s editorial policies.