Impactful innovations in the financial markets are rare. What passes for innovation is often just an old idea dressed up for a new era. However, it is safe to say that target-date funds, in retirement plans, are a true, durable innovation. A new study from the Investment Company Institute, shows that more retirement plans and participants are utilizing target date funds and more assets continue to flow into them.

What’s interesting about target-date funds isn’t growth in AUM. Brian Portnoy in a recent talk with Daniel Crosby talks about how the ‘behavioral finance entertainment complex’ has done very little for investors. So what’s interesting about them is that they are one visible area where behavioral finance has notched a big win.

For the past two years we have discussed, and argued about, the right way to approach the novel coronavirus. Despite some big wins, like the vaccine, much of the communication has been muddled and not consistent with behavior. Dr. Jay K. Varma writing at the New York Times writes that making things like masks and rapid tests widely available will help people make better decisions, even absent a mandate.

The same can be said for target-date funds. Making them widely available, and easy to understand, make them an ideal vehicle for the vast majority of retirement savers. Are target-date funds perfect? By no means, especially if they carry high fees. But they make for better behavior. You don’t see a lot of people trading their target-date fund based on market headlines.

In too many aspects of our lives, not just financial, things are way too complicated. Target date funds are not. Which is one reason why they continue to attract investment assets.