Title

Retirement savings investment choices: Sophisticated or naive?

Document Type

Journal Article

Publisher

Elsevier

Faculty

Faculty of Business and Law

School

School of Business

Comments

This article was originally published as: Gerrans P., Ghialy, Y. (2014). Retirement savings investment choices: Sophisticated or naive?. Pacific Basin Finance Journal, 30(), 233-250. Original article available here

Abstract

We assess investment sophistication in a large sample of auto-enrolled, retirement plan member choices. A strong preference for using a small number of investment options is provided with little evidence, overall, to support equally weighted allocations. However, when multiple options are selected, one-third are equally weighted allocations and this is more prevalent when an easily divisible number of options are used. Positive learning is suggested in patterns of choices with sophisticated choice more likely in later choices. Possible consequences of menu framing, specifically menu size, do not support influence on effective asset allocations.

DOI

10.1016/j.pacfin.2014.10.005

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