Individuals planning for retirement are increasing their diversification and turning to professional managers for help, according to a study by Vanguard.

A third of Vanguard’s 401(k) plan participants turned their entire retirement account over to professional managers, either in the form of a target-date or balanced fund, or they enrolled in the company’s managed account program.

According to the Vanguard Center for Retirement Research, 60% of plan participants now have balanced portfolios, which Vanguard defines as having an equity position between 40% and 90%. That broad definition allows for a lot of aggressive behavior, but even so, the report shows an improvement from recent years. In 2004 just 37% of plan participants could claim to have a diversified portfolio.

What’s more, the trend towards more diversification looks likely to continue, as plan participants are increasingly turning to professional money managers to make the asset allocation calls for them.

“The most important trend I see in how America saves today is the adoption of professionally managed allocations by our participants,” said Jean A. Young, a senior research analyst at the center, and the report’s author, in a video accompanying the report. She said that one of the criticisms of defined contribution plans, including 401(k)s and other types of plans for non-profits and others is that workers are not qualified to make their own asset allocation decisions. This trend alleviates that problem.

But critics would still say that asset allocation is only as good as the allocator, and even professionals can make mistakes. So the combined 30% of participants who have all their eggs in one fund’s basket have placed a lot of trust in the diversification skills of one management team.

The third of Vanguard’s plan participants outsourcing asset allocation breaks down like this: 24% had their entire nest egg in a target-date fund, 6% had it in a balanced fund, and 3% gave it to the company’s managed account program to allocate.

“This is huge, because we know these professionally managed allocations are dramatically improving diversification and portfolio outcomes for participants,” she said. She projected that in five years over half of Vanguard’s participants will be using professionally managed allocations.

When it comes to savings rates, things still need to improve. The typical Vanguard participant is doing reasonably well, saving 10% a year, according to the report. (That rate includes both worker and employer contributions.) But the company’s Center for Retirement Research believes most workers should be aiming to save 12%-15% or more each year. About a third of their plan participants hit that mark in 2011.

“Going forward we need to reach for higher contribution rates for more individuals and we need to improve portfolio construction for more of our participants,” she said.

This article first appeared in Financial Planning, a SourceMedia publication.

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