For all the talk about investment options as they pertain to401(k) plans, beyond addressing the basics there's very littledifferentiation in the long-term impact of the choices. What doesmake a difference? According to a May 2014 report from the PutnamInstitute, “…regardless of strategy, fund selection generatedroughly the same amount of wealth.”

For years, advisers, plan sponsors and retirement savers havebeen led to believe in the preeminent importance of investmentchoices. Companies formed investment committees to listen toinvestment consultants as frequently as once a quarter. This wasconsidered the “prudent” thing to do.

But was it? The Putnam Institute report is just one of thelatest research papers belittling this idea. There's no practicaldifference between utilizing the wide variety of long-terminvestment options available. Is it really “prudent” to emphasizeinvestment due diligence at the expense of other factors?Furthermore, to what extent is there a breach of fiduciary duty ifthose other factors have been shown to have a greater impact onachieving retirement success?

These questions have leading industry experts pondering—anddoing something. Like other studies, the Putnam Institute offersthis conclusion: “For many years, fund performance has taken centerstage in the discussion of DC plan effectiveness and how to improveit. With the present study, we hope to shift the emphasis of thatdiscussion to deferral rates—and the ways in which plan design andemployee education can be leveraged to raise deferral rates foreligible participants.” But it is the loudness of actions thatovershadow these words.

Regarding plan design, we're seeing a now almost universal useof auto-enrollment. This alone doesn't address the core issue, asthe auto-enrollment deferral rate is generally well below the idealdeferral rate. That's why an increasing number of plan sponsorshave also adopted auto-escalation. This automatically brings up thedeferral rate to its target level.

The growing use of the “one-portfolio” single fund option(usually a target or risk-based fund) removes the onus ofinvestment decision making from the shoulders of those who don'twant that burden. Moreso, the latest and greatest Investment PolicyStatements now categorize fund options not in investment-basedtiers, but in behavior-based tiers (usually 3-4 ranging from“do-it-for-me” to “do-it-myself” employee personas).

This isn't to say plan-level investment advice andparticipant-level coaching is not important. It's still criticalthat plan sponsors conduct investment due diligence on the(decreasing number) of investment options offered to make sure theymeet the long-term growth needs of their employees. Thistraditional investment adviser role will not disappear. On theother hand, at the participant level, we'll be seeing lessinvestment “advice” and more lifestyle “coaching.” Given thefrailties of human behavior, the temptation to buy high and selllow is best thwarted by a good coach.

Whether you're a plan level adviser or a participant coach, makethe effort to put a spring into savings.