Concerns about fees and litigation (particularly litigation about fees) have drawn attention to the fee differential typically found between active and indexed, or passive, strategies.
The response of Summit Insiders? Well, the vast majority were situational, with two-thirds (63%) indicating that they sometimes favored passive options over active, “depending on the situation.” That stood in sharp contrast to the 6% that indicated they never did – a finding that matched that in last year’s survey.
We offered a couple of new options for this year’s responses, however – and found that 13% said they were favoring passive “nearly all the time,” while another 10% were doing so more than half the time, and 8% characterized those inclinations as “occasionally.”
As for the driver(s) behind that decision, a plurality (37%) cited a desire to reduce plan costs, followed (distantly) by plan sponsor demand (22%), and not seeing the value in active management (16%).
The 531 respondents to the 2019 Summit Insider poll were identified as retirement plan advisor attendees at the NAPA 401(k) Summit. They tended to be experienced; more than half had a least 15 years of experience, and half of that group had in excess of two decades. However, nearly one in five (18%) had less than 5 years, and the remaining third split nearly equally between those with 10-15 years of experience and those with between 5 and 10 years.
For more Summit Insider Insights, see:
- ‘To’ Versus ‘Through’?
- Are You Ready for MEPs?
- Is ESG Over-Hyped?
- Why Advisors Pick – and Punt – Recordkeepers
- TPAs Making Inroads with Advisors
- A Bottom Line on Your Bottom Line
