Eighty-six percent of defined contribution plan sponsors in a new survey offered a 401(k) plan as the primary DC plan, and 85% of surveyed plans offered a Roth feature — up from 68% in 2016.
Callan, an employee-owned investment consulting firm, conducted an online survey in September and October among 106 DC plan sponsors, including both Callan clients and other organizations. Some 90% of plans in the survey had more than $100 million in assets; 62.2% were “mega plans” with upward of $1 billion in assets.
Plan sponsors said the most important step in improving fiduciary positioning in 2019 was reviewing plan fees. Plan fees replaced retirement readiness, last year’s highest rated area, which fell to the middle of the priority list for 2019.
“With the amount of fee study and recordkeeper search project work we see, it is not surprising that fees are the No. 1 priority for plan sponsors in 2019,” the report’s co-author and a Callan DC consultant, Jamie McAllister, said in a statement.
“What is surprising: Over 40% of plan sponsors said they don’t evaluate indirect revenue when calculating and benchmarking fees. As indirect revenue can be a meaningful amount, we feel it’s important for sponsors to consider this in their overall fee evaluation.”
One in five plans in the survey said they intended to conduct a recordkeeper search in 2019.
Callan also found that fee payments were shifting away from participants, as 32.5% of all administrative fees were paid entirely by participants last year, way down from 62.7% in 2017.
Survey respondents indicated participant communication and financial wellness (a new category in this year’s survey) were the next two highest areas of focus for 2019. Callan said prioritizing financial wellness and communications would likely go hand-in-hand this year.
Although cybersecurity has been much in the news, respondents put it dead last as a priority area for 2019.