Too few choices in employee 401(k) plans have many investors reaping inferior returns because they're not properly diversified, according to a recent academic study published by three New York finance professors.

In a research paper entitled "The Adequacy of Investment Choices Offered by 401(k) Plans," New York University Nomora Professors of Finance Martin Gruber and Edwin Elton, along with Christopher Blake, professor of finance at Fordham University, argue that the lack of diversification of investment options in 401(k) plans will "significantly decrease participants' terminal wealth."

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