Market Environment Taking Toll on Participant Contributions

Although the significant majority of the 154 advisers surveyed by Putnam Investments said plan participants in the plans they manage are continuing to contribute to their 401(k) accounts, 21.1% said participants are decreasing their contributions to their plans.

Plan sponsors appear to be keeping their retirement plans generally intact; 84.6% of advisers said their plan sponsor clients are continuing to provide the matching contributions at the current level.

However, some advisers indicated sponsors are delaying auto-enrollment decisions (7.4%), continuing to provide profit-sharing contributions (5.4%), and delaying adoption of the QDIA-sanctioned investment options (2.7%).

Fiduciary Concerns

Most advisers think plan sponsors’ fiduciary concerns have increased from last year. In fact, 17.7% of advisers reported plan sponsors’ fiduciary concerns have increased significantly, while 58.9% said only that concerns have increased, and 23.4% said the concerns have stayed the same. No advisers indicated that plan sponsors’ fiduciary concerns have decreased.

The number of advisers who choose to act as fiduciary or co-fiduciary versus those that do not is relatively split. According to the survey data, almost half of advisers now act as fiduciary or co-fiduciary for the plans they manage, and 51% do not sign as fiduciary.

Default Fund Recommendations

Nearly all (91%) advisers primarily recommend target-date and target-risk funds as default plan investment options. When recommending target-date funds, asset allocation is the most important criterion (after performance) for about 36% of advisers. After asset allocation, the next largest criteria were expense ratios (17%), glide path (13%), and a track record of more than three years (13%).