One would think firms that give financial advice would have great returns on their own employees' savings plans.
Sadly, no. According to a report titled “Reinventing Retirement Income in America” from the National Center for Policy Analysis in Dallas, the 401(k) plans of five firms — Morningstar, Prudential, Hewitt Associates, Citigroup and Merrill Lynch — consistently underperformed market benchmarks from 1995 through 1998, the latest period for which data are available.
The analysis considered only investments chosen by the employees.
In the four-year period, not one of the firms “came close to matching the performance of the stock market,” and only in 1996 did any of the plans meet or exceed an index of 60 percent stocks and 40 percent bonds.
The study isn't intended as a criticism of these firms, the NCPA says. Rather, “it is reinforcement for concerns about the investment decisions many participants in 401(k) plans are making (or not making),” the report states.
It is accessible through the NCPA's Web site, www.ncpa.org.