According to a survey by Cogent involving nearly 1,500 plans of all sizes, 11% of plans indicated that they were likely to change record keepers over the next 12 months, consistent with last year’s turnover rate and historical patterns.
Larger plans had a higher potential rate of change. Overall, fees and investments were cited as the primary reasons for concern, with larger plans citing service quality and participant services.
Much of record keeper change, however, could be the result of the massive consolidation hitting DC record keepers, with deals announced or closed affecting plans record kept by NYLife, JP Morgan, Ascensus and BMO over the past year. If a conversion is inevitable, why not shop around? In addition, as the ranks of providers are winnowed, the survivors might be able to invest more in services and technology, further widening the gap.
But more important than record keeper turnover is advisor of record changes. With an estimated 250,000 advisors getting paid on at least one DC plan, and only 10% of them with $25 million or more of DC AUM, there are hundreds of thousands of plans being serviced by blind squirrels or advisors accommodating a few clients.
As assets swell, these plans become more attractive to Core and Elite plan advisors. That, in tandem with a growing sophistication on the part of employers increasingly likely to appreciate the benefits of using an experienced plan advisor, could result in an even higher turnover rate for advisors.
