What’s Wrong With This 401(k) Enrollment Form?

I was searching for a 401(k) form to include in a lesson that I am developing when I found this 401K Enrollment Form.

Before diving into the nitty-gritty of this form, let’s take a step back and look at what we know about choices.  For those familiar with Barry Schwartz (TED talk here with over 6 million views), who wrote the Paradox of Choice, he found that too many choices tend to make most of us miserable (from interview with Barry Schwartz):

Making decisions is difficult, and the more choices we have, the more difficult it becomes. We come to feel overloaded by the number of options, unable to cope. Too many choices also increase our regret for all the options we didn’t choose, and make us more disappointed with ourselves if our decisions turn out badly. Additionally, the time we devote to making decisions decreases the time we have to spend on other aspects of life, such as forming close relationships.

Now back to the 401(k) Enrollment Form.  Let’s take a topic that most people feel they know very little about like investing…and lets give them….32 choices.  How about some consumer friendly fund names too, like the “Morgan Stanley Institutional Fund Trust Mid Cap Growth Portfolio Class A.”  Huh?  And we wonder why employees don’t participate in these plans?