Financial services firm J.P. Morgan announced in a statement on November 9 that it is introducing a new means of picking investments for individuals who want to use 401(k) plans.
The new plan, called Core Menu Innovation (CMI) simplifies the traditional offerings of 18 or more funds by offering the defined contribution plan participants with three investment portfolios. One investment portfolio offers a basket of cash alternatives, one offers various stocks and the final one invests in several bonds.
Under the company’s proposal, the default option for new 401(k) participants will be enrollment in target date funds, according to Reuters.
“CMI represents our most advanced thinking on how to help Americans achieve a more financially sound retirement,” Michael Falcon, head of Retirement for J.P. Morgan Asset Management, said in the statement. “The 401(k) plan is the primary retirement savings vehicle for most Americans today, so it’s critical that we help participants make better investment decisions.”
Research conducted by J.P. Morgan indicates that individuals who invest independently usually generate returns lower than investment plans that are assisted by professionals, according to the statement.