Plan Sponsors Say Fee Fairness, Disclosure Lacking
More than half (55.3%) the nearly 4,000 plan sponsor respondents to PLANSPONSOR’s Eighth Annual Defined Contribution Services Survey said that the approximate annual cost for maintaining the plan was less than 1% of plan assets, excluding fees charged to participant accounts. Nearly four in 10 said that the approximate annual cost charged against participant accounts as investment management or other fees was less than 1% of participant accounts.
However, more than 15% said they “didn’t know” the approximate annual cost of maintaining the plan, and 17% said they “didn’t know” the approximate annual cost charged against participant accountsstatistics that appear to belie the dramatically heightened emphasis on fees as a fiduciary concern, both in the media and from regulators.
Service “Stations”
It is not surprising, therefore, to find that “fee fairness” and “fee disclosure” ranked at the bottom of the plan sponsor service rankings, as it did a year ago. Service rankings on contribution splits, check processing, and responsiveness topped that list, but all slipped very slightly in terms of overall evaluation.
Account representative expertise, discrimination testing, and accuracy/timeliness of 5500s all moved up noticeably in plan sponsor evaluations.
As for evaluating service levels, the quality of service to participants continues to be the top priority of plan sponsors in selecting and evaluating a DC plan provider, which garnered a ranking of 6.77 on a 7.0 scale in this year’s survey.
Service to the plan sponsor was second, while investment performance, financial strength of the provider, and variety of investment options rounded out the top five.
In a year tarnished by accounting, mutual fund trading, and insurance commission scandals, market image/reputation jumped to a 5.91 ranking from just 5.81 a year ago on that same 7.0 scale.