First there was paternalism. Employers starting 401(k) plans said to workers, we'll pick a few investments we like, and you can put your money in. But many workers didn't bite.
Next there was choice. Employers said, we'll give you boatloads of options and you can Take Control. But again, many workers didn't bite.
Then there came the automatics. Employers said, if you don't say otherwise, we'll automatically enroll you in the plan, automatically put you in a "suitable" investment option, and that may be a "life cycle" fund that automatically adjusts as you age.
But even these hands-off features, a growing number of employers are concluding, don't get their k-plans where they want them to be. So, encouraged by a regulatory climate that appears to grant employers more latitude in giving workers advice -- not to mention the specter of lawsuits by workers who claim they didn't get help and therefore made bad choices -- some companies are signing up outside experts who will offer disinterested advice and in some cases take over all the decision-making for a worker if he or she chooses.
These employers, said Jeff Maggioncalda, chief executive of Financial Engines, a Palo Alto, Calif., firm that provides account management for workers, are concluding that "people aren't changing their behavior . . . so let's change the 401(k) plan."
To accomplish this, firms are now hiring Financial Engines and firms like it to do the investment thinking for workers who prefer not to do it themselves.
Typically, these firms are not the actual stock and bond pickers. Instead, they help guide workers in making choices among the mutual funds and other offerings in their employer's 401(k) plan.
In the case of Financial Engines, workers can get advice and then make investment choices themselves, or they can hand over all the decisions to Financial Engines.
Financial Engines prepares an analysis that takes into account such factors as risk tolerance and time horizon, and that also allows workers to show assets outside the plan, so those can be taken into account in constructing a portfolio.
The worker can be as involved as he or she wants to be. "For an individual it can be totally personalized, but literally all it really takes is a signature and they're done," Maggioncalda said.