Investor inertia is one of several factors that must be considered when evaluating plan participants' likely reaction to a major stock market correction, say benefit experts.

Although employee investors fall into a range of risk-tolerance categories, relatively few actively switch investments, they say.

"There are a number of employees who are extremely conservative, like stable value and don't move back and forth," said consultant Murray Becker of Becker & Rooney, a Fort Lee, N.J.-based division of Kwasha Lipton L.L.C. "Others love equities and don't move back and forth, or at least not into stable value."

Still others pick a mix of investments, such as a 50/50 or 75/25 ratio of stable value to stocks, and do not change it very often, he said.

"And then you have the swing players," said Mr. Becker, describing employees who want to be in stocks when they are going up and out of them when they are going down, and are responsible for a disproportionate number of transfers among the stock and stable value funds.

Donald Butt, manager of trust investments for telecommunications company US West Communications Inc. in Denver, agreed that relatively few plan participants change their investments. Less than 5% of his company's employees make one change or more a year, he said. If there were a stock market crash tomorrow, while there might be some grumbling, relatively few people would be changing their investments significantly, he predicted.

"For the vast majority, it's because they're passive," Mr. Butt said. When they were first hired, they made an asset allocation decision operating perhaps from a reasonable knowledge base, but more likely based on information from friends and co-workers, "and then they don't make changes."

"I would like to say we've had a tremendous impact" in educating employees about asset allocation and the benefits of setting investment goals over the long term rather than in response to current market conditions, "but that's not the case," Mr. Butt said.

Certainly a significant number of plan participants know more today than they did 10 years ago, he said, but there is still a long way to go in educating employees.

"It's going to take a while and it's going to have to come through co-workers, neighbors and relatives," said Mr. Butt.

There also is a generational element in investment strategy, with younger people more savvy than their elders, said Mr. Butt, who noted his own son became a 401(k) participant for the first time as a high-school student working a part-time summer job.

Investment goals also must be taken into account in predicting plan participant activity, said Mr. Becker of Becker & Rooney.

He said it is common for employers to mistakenly view all 401(k) participants as having a single investment objective-which is providing for their retirement-when in fact many employees view these plans as a way to meet intermediate or short-term goals, which could influence their willingness to ride out a stock market downturn.

The average, younger employee, for instance, may see his 401(k) plan as an emergency fund in the event he loses his job and has to spend six months looking for another, while others may see it as a means to fund their children's college educations, Mr. Becker explained.

In addition, he noted, some benefit experts are beginning to question the conventional wisdom that older employees should invest their 401(k) funds more conservatively while younger investors should take more risk.

Many people are beginning to argue that younger people who must build up their assets should have a more conservative investment strategy, while older retirees, who have other assets elsewhere, can afford to take more risk with their 401(k) funds, he noted.