Out of sight no more? The effect of fee disclosures on 401(k) investment allocations

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

Journal of Financial Economics, 2021, vol. 141, issue 2, 644-668

Abstract: We examine the effects of a 2012 regulatory reform that mandated fee and performance disclosures for the investment options in 401(k) plans. We show that participants became significantly more attentive to expense ratios and short-term performance after the reform. The disclosure effects are stronger among plans with large average contributions per participant and are 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 and performance information can mitigate participants inertia in retirement plans.

Keywords: 401(k) pension plans; Disclosure; Expense ratio; Financial regulation; Mutual funds; Pensions; Performance (search for similar items in EconPapers)
JEL-codes: G11 G23 G28 G40 H55 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Out of Sight No More? The Effect of Fee Disclosures on 401(k) Investment Allocations (2020)
Working Paper: Out of Sight No More? The Effect of Fee Disclosures on 401(k) Investment Allocations (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:141:y:2021:i:2:p:644-668

DOI: 10.1016/j.jfineco.2021.04.008

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