While retirement plan sponsors increase the investment choices available to employees, plan participants continue to use only a fraction of the options available to them.

Core Funds
Bonds	82%
Money Market	78%
International Equity	75%
Equity Index	63%
Stable Value	61%
Actively Managed Domestic Equity	60%
Non-Core Funds
Asset Allocation/Lifestyle	48%
Real Estate	17%
Self-Directed Brokerage	12%
Alternative Investments	4%
Employer Stock	2%

Participants in plans with less than $10 million in assets, for example, use only a mean of five of 16.6 investment options, according to research by Spectrem Group. The contrast is even more dramatic in plans with more than 1,000 participants; on average, participants in those plans have 19.9 options but choose to use only 3.7 of them.

This phenomenon may be the result of confusion caused by too much choice, as participants are unable to make educated decisions regarding prudent portfolio development.

Fortunately, it appears providers and sponsors alike have begun to take steps to remedy this problem. By providing funds that offer diversified asset positions, such as asset allocation, lifestyle and target date funds, participants are given the opportunity to leave their portfolio allocation decisions to professionals.

These fund options are not the norm, however. Asset allocation and lifestyle funds are far less common than more traditional offerings, particularly among small plans. This is true, despite efforts by the mutual fund industry to position asset allocation and lifestyle funds as a prudent choice for individuals who want to leave investment management to the professionals.

Meanwhile, more plans have added self-directed brokerage accounts and real estate options to their lineups.

Research shows 12% of plan sponsors now offer self-directed brokerage accounts, which are particularly appealing to self-directed investors and senior corporate executives. Real estate investments have gained favor in the wake of the 2000-2002 bear market, as investors have sought alternatives to investments in the stock and bond markets. Today 17% of small plans offer a real estate option to their participants