The Evolution of the Investment Menu: When More Choice Does Not Mean Better Decisions

Over the past decade, retirement plan investment menus have expanded steadily. The prevailing assumption has often been that more options improve diversification and demonstrate fiduciary diligence. Recent industry research, however, suggests that menu size alone may not lead to better participant decision making.

As defined contribution plans grow more complex, attention is increasingly shifting from how many options are offered to how participants interact with them.

Collective investment trusts have become a central feature of this expansion. Adoption has accelerated as plan sponsors evaluate institutional pricing structures and operational flexibility. By early 2025, CIT based target date strategies represented a significant share of total target date assets, reflecting a structural shift in retirement plan investment vehicles.

At the same time, behavioral finance research continues to highlight the challenges associated with excessive choice. Larger menus can increase cognitive load, leading participants to rely on defaults, delay decisions, or disengage altogether. In this context, expanding menus without additional structure may offer diminishing benefits.

Target date funds remain the primary default option in many plans, making their design and oversight particularly important. Sponsor activity around target date due diligence has increased, reflecting recognition that default selection often has a greater impact on participant outcomes than active fund choice.

Alongside defaults, managed accounts and other guidance frameworks have gained traction. These tools are often discussed as ways to help participants navigate complexity rather than as replacements for simplified menu design.

Some sponsors have also explored tiered menu structures that separate default solutions, core options, and specialized choices. The objective is organizational clarity, not expanded choice.

Recent plan sponsor research points to a gradual reframing of menu design priorities. Instead of focusing on whether a menu is comprehensive, sponsors are increasingly evaluating whether it is usable and aligned with participant behavior.

This shift does not imply a single optimal approach. Effective menu design depends on plan demographics, governance resources, and communication capabilities. What appears consistent across research is that clarity, structure, and decision support often matter as much as the number of available options.

The evolution of investment menus reflects a broader maturation in retirement plan design. Choice architecture, default structures, and usability are increasingly recognized as central components of participant engagement.

Rather than assuming that more choice leads to better decisions, current industry discussion emphasizes making existing choices easier to understand and use. In that sense, the future of menu design appears less focused on expansion and more focused on relevance.

• PLANSPONSOR, 2025 Recordkeeping Survey
  https://www.plansponsor.com/surveys/2025-recordkeeping-survey/
• InvestmentNews, Target Date Fund Assets and the Rise of Collective Investment Trusts, 2025
  https://www.investmentnews.com/retirement-planning/target-date-fund-assets-surge-to-397-trillion-in-2024-as-cits-overtake-mutual-funds/259560
• JPMorgan Asset Management, Plan Sponsor Survey Findings, 2025
  https://am.jpmorgan.com/content/dam/jpm-am-aem/americas/us/en/insights/retirement-insights/plan-sponsor-survey-ri-psr.pdf
• DCIIA, Future of Collective Investment Trusts, 2025
  https://cdn.ymaws.com/dciia.org/resource/resmgr/rrc_media/projects_2025/DCIIA_RRC_2025-Future-of-CIT.pdf