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PSCA survey: fee disclosure yields few changes in investment decisions

By Warren S. Hersch

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Nearly all sponsors of defined contribution plans report no change in the investment decisions of plan participants as a result of fee disclosure information, new research reveals.

Plan Sponsor Council of America, Chicago, released this finding in a survey on the impact of fee disclosure regulations on defined contribution plan participants. The survey, conducted in October, received 176 responses from defined contribution plans sponsors.

Plan sponsors with 1-99 participants (eligible employees with an account balance) accounted for the largest share of the respondents (27.8%). Plans with 100-999 participants, 1,000-4,999 participants and 5,000-plus participants constituted 21.6%, 26.1% and 24.4%, respectively, of the remaining respondents.

More than 9 in 10 plans sponsors (95.9%) report no change in the investment decisions of plan participants as a result of fee disclosure information, the survey shows. Less than 3% of the respondents identified changes in investment allocations, the highest percentage (2.6%) recorded among plan sizes servicing 100-999 plan participants.

The survey found no changes in participant behavior when respondents were asked about participants’ changes in deferral rates or participation rates.

One in seven 15.4% of the plan sponsors sent out a request for proposal/request for information (RFP/RFI) as a result of the fee disclosure regulation, the survey shows. Respondents with 1-99 employees accounted for the highest percentage of plans (17.4%) that sent out an RFP/RFI.

Those with 100-999 employees, 1,000-4,999 and 5,000-plus plan participants accounted for 25%, 13% and 7.3% of respondents, respectively.

The survey additionally reveals that an average of 1.4% of participants asked questions regarding fee disclosure information they received. Plans with 1,000 to 4,999 participants accounted for the largest percentage (1.4%) that asked questions.

Plans with 1-99 participants, 1000-999 participants and 5,000-plus participants accounted for 1.3%, 1.3% and 0.9%, respectively. 

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