A new report notes that 401(k) plan sponsors are consolidating the number of DC investment manager relationships as well as the number of plan investment options in an effort to reduce plan costs.
The report, by Cogent Reports, also finds that for the first time, the desire to reduce fees and expenses outranks underperformance as the most common reason for dropping an investment manager from the plan lineup.
The report notes differences in intended actions by plan size, with smaller plans more likely to request lower fees, and larger plans looking for lower-cost, more personalized investment options.
In fact, despite reductions in investment options and relationships, the report finds an increase in the types of investment products offered in 401(k) plans. Mutual funds remain the most common investment vehicle offered, yet in search of performance and a more favorable fee structure, interest is rising in products such as managed accounts, ETFs and collective investment trusts (CITs).
These and other findings are included in Retirement Planscape, an annual Cogent Reports study by Market Strategies International.
The results were based on an online survey of a representative cross section of 1,435 401(k) plan sponsors from February 15 to March 15, 2016. Plan sponsor survey participants were required to have shared or sole responsibility for plan design, administration or selection and evaluation of plan providers or for evaluating and/or selecting investment managers/investment options for 401(k) plans.
