You remember that classic labyrinth wooden maze game. It’s the toy that has captivated and challenged children and adults for generations. It takes concentration and dexterity to guide the steel ball through the maze to reach the winning position.
Well, this is the 21st Century after all, and some folks from the Cowtown Computer Congress in Kansas City made it into a robotic labyrinth game as pictured above. They plugged an Arduino and two servos into the wooden labyrinth board game, and added some programming and a WiiFit board.
Kinda like a 401(k) participant managing his or her own account to get to retirement with adequate income. Instead of WiiFit, they’re using employer sponsored investment education programs. Now I don’t know about how the computer folks feel about the results of their project, but 401(k) participants now think that current investment education programs are coming up short.
That acccording to String Financial’s recent study, Market Insights: Helping Tomorrow’s Retirees Better Prepare Today.
String Financial surveyed over 400 defined contribution plan participants in the third quarter of 2008. The respondents’ collective view of educational materials supplied by 401(k) providers and their employers is that they are:
- Difficult to understand. 34% of respondents felt the materials included terms or concepts that they did not understand and were not adequately explained;
- A commodity product:. 41% agreed that the materials do not contain information that could not be easily found elsewhere (19% disagreed);
- Ineffective. Fewer than 19% of respondents indicated that the educational resources led to changes in retirement planning behaviors or practices.
And in real terms, even worse if you look at how research conducted by DALBAR. For the past 15 years, DALBAR has been issuing a report called the Quantitative Analysis of Investor Behavior (QAIB) that examines the returns that investors actually realize and the behaviors that produce those returns.
I’ll leave the commentary and analysis of the report’s results to the investment experts like our friends at Interlake Capital Management, LLC who in their blog, The Float, wrote, Dalbar 2009: Not Pretty.
Not pretty, indeed. While the S & P 500 earned an average return of 8.41% from 1988 to 2008, the average equity investor earned a mere 1.87%. Some call that 6.54% per year over that time period the cost of uninformed investing, and some call it the cost of going it alone. I call it the cost of inadequate retirement income.
And the answer is?