????After the latest market drop, planners and investors are trying to figure out that means for their retirement plans.

????By Katie Benner

????Last year's meltdown was a sobering moment for 401(k) holders who were used to a market that only went up. Many of them thought of investing as risk free.

????When that bubble popped along with housing and credit, 401(k) plan sponsors and investors wondered just what would happen next.

????Kristi Mitchem, head of Barclays Global Investors' U.S. Defined Contribution business took some time to speak with Fortune about what is next for the 401(k) and how investors can get the most out of their retirement plans.

????BGI manages 65% of the world's 100 largest pension plans and is the fourth-largest defined contribution plan manger in the U.S. It also helps companies make the shift to 401(k)s.

????What are the main concerns for plan sponsors in the wake of last year's meltdown?

????I think we'll see sponsors continue to work on fees and expenses. It was certainly a topic discussed in Washington after the market downturn, and the Fee Disclosure Bill was passed in the House about two months ago. A lot of attention has been given to these costs in the litigation world, and it puts a spotlight on their importance.

????Fees are kind of like death and taxes: You may not know what your return will be, but you know that you'll pay fees. So the one way that you can really enhance your balance is by lowering the fees that you pay.

????A recent Hewitt survey indicated that 59% of plan sponsors have significantly reduced fees in the last 12 months, and almost the entire balance were making it a goal to reduce fees and expenses for the rest of 2009.

????How are sponsors lowering fees and how does this affect what is in our 401(k) plans?

????One strategy has been to focus on indexation and to move away from under-performing actively-managed funds. I think this could give a boost to things like ETFs, which are increasingly finding a footing in the 401(k) world, as the fees tend to be lower.

????Many employees were elated to see the value of their 401(k) plans increase during the last decade of great returns, and they were shocked to watch their wealth evaporate during the meltdown. How bad was the carnage for contribution plans?

????The average 401(k) investor lost under a third of their assets in 2008; and returns have obviously been much more positive this year than they were last year. The reduction in volatility and generally the positive momentum in the stock market has gone a long way to reassuring plan participants.

????Nonetheless, I think participant anxiety over the dramatic move downward does highlight a very real issue, which is the importance a guaranteed income that allows you to plan for a floor on your spending in retirement. This guaranteed income in essence functions much more like a defined benefit program.

????So while I would say that the events of 2008 were not catastrophic for the majority of 401(k) investors, they offer us an opportunity to recognize some of the deficiencies in the 401(k). Sponsors are now looking for a way to provide guaranteed income.

????While you deal primarily with plan sponsors, are there any words of advice that you would give to people who have 401(k) plans?

????First, make sure you're well diversified. A target date funds or balanced funds could be good options for diversification and they allow you to put your plan, to some degree, on autopilot.

????Second, avoid company stocks. Your employment is tied to the performance of your company. Your wages are tied to the performance of your company. So you probably don't want your retirement money highly dependent upon the performance of your company from a diversification perspective.

????There's been some fascinating work that shows most employees actually view a single investment, 100% of their assets in their own company's stock, as less risky than an investment in the S&P 500. There's somehow this feeling that if you work there, you know what's going on.

????I think it's important to caution employees that the best thing for them is to have a well-diversified portfolio, and company stock just really doesn't have a place, in my view, in the retirement account.

????Lastly, take advantage of any retirement planning services offered by your employer. Many employers offer educational tools whether it's automated advice or meetings with personal financial planners. It's worth the effort and it's worth the time to take advantage of those services. It should go a long way to giving you a better portfolio and more peace of mind.