More than one-third of plan sponsors intend to change their mix of investments in the coming year, according to new data from Cogent Research.
Those who plan to make a change will typically swap an existing option with another manager without changing the number of investment options offered.
The average defined contribution plan offers about 20 investment options from three to five different investment managers. The main reason many plan sponsors decide to drop an option or reduce their investment lineup is underperformance relative to benchmarks, according to data gleaned from Cogent Research’s 2013 Cogent Retirement Planscape study, which was conducted among plan sponsors in March and April of this year.
The study also found that 38 percent of all plan sponsors are very confident their plan fees are comparable to those paid by their peers with a similar organizational profile. The largest DC plans report higher confidence in their fees than micro and small plan sponsors.
Among the 73 percent of plan sponsors who said they received fee disclosure information from their plan providers last year, 46 percent said they plan to maintain their current fee arrangements.
About one in five plan sponsors plan to request fee reductions, with 31 percent of mega-plan sponsors likely to take such action, according to Cogent. Even fewer foresee changing from bundled to direct fees or issuing a new request for proposals for plan recordkeeping services in the coming year.