Analyzing 11-K reports from 1993 so that he could follow the investment performance of the stock in question, Benartzi found that, when the company match is offered in employer stock, participants tend to invest more of their discretionary funds in that instrument than they would otherwise. In both of these studies, he found that the most common response to a hypothetical match was to invest discretionary funds in the same vehicle. Attorney Stephen M Saxon of the Washington-based Groom Law Group does not believe that Benartzi's findings introduce a new twist to assessing fiduciary liabilities, however. The other reason that Benartzi cites for his interest in the company stock question is the prevalence of participant investment autonomy. The UCLA professor points to both the shift from defined benefit plans to defined contribution plans and the debate over giving individuals the leeway to choose their own asset mixes for their Social Security funds.
Financial advisors say as much.
However, the standard deviation is so much higher on an individual stock than on a mutual fund, that mPower users can see graphically that their ultimate numbers can be radically affected by the percentage of assets in company stock. It should be noted that mPower calculator users have the option of leaving their company stock out of their number crunching, enabling them to ignore the obvious. Financial Engines' Christopher Jones, vice president of financial research and strategy, acknowledges the divide between fiduciary issues and employers that want to align the interests of the workers with management. Financial Engines treats company stock like any individual stock, analyzing its investment value in a household's total portfolio. The stock is not treated generically, so the risk profile of owning General Motors is not the same as that of Oracle, for example.