Conflicted advice about portfolio diversification
Social Science Research Network(2023)
摘要
We investigate the validity of the argument by the financial services industry to “roll over your ‘old’ 401(k) plan” because 401(k)-type plans have a limited number of investment options, while Individual Retirement Accounts (IRAs) have a virtually unlimited number of options. We empirically analyze the diversification of a large 401(k)-type plan with only five basic investment options. Financial advisers with a conflict of interest may use strategic complexity to encourage rollovers, recommending complex portfolios to impress naïve clients who have a weak understanding of the concept of diversification, while not weighing the cost of the complex portfolios against any added benefits of diversification.
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portfolio
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