The PROgram was created to serve the reluctant investors in your plan ... but who are reluctant investors?

In general, reluctant investors are those that do not have the time, desire, or knowledge to invest for themselves. Reluctant investors make up most of the participants in defined contribution plans.

A recent paper published by the Pension Research Council said, "…we find that people lack even a rudimentary understanding of stock and bond prices, risk diversification, portfolio choice, and investment fees." (Financial Literacy and Financial Sophistication Among Older Americans; Annamaria Lusardi, Olivia S. Mitchell, and Vilsa Curto; Pension Research Council WP2009-25.) Yet in most 401(k) plans, participants are asked to perform asset allocation, fund selection, rebalancing, and other functions that are typically performed by professional money managers. Do investment professionals get better results than plan participants?

The human resource consulting firm, Towers Watson (formerly, Watson Wyatt Worldwide), studied whether participant-directed 401(k) plans or professionally managed Defined Benefit plans had better investment returns over time. (Defined Benefit vs. 401(k) Plans: Investment Returns for 2003-2006; Watson Wyatt Insider; June 2008.)

From 1995 through 2006, using two hypothetical company plans starting with $100 million in assets, Watson Wyatt found, "By the end of 2006, Company X's DB plan held $310 million in assets, while its 401(k) plan had only $273 million - a difference of nearly $37 million or 14 percent."

The financial professionals at ProManage have over ten years of experience managing participant accounts. Put them to work for your reluctant investors.