Market Differentiation

Breaking down the DC industry by plan type.

Each June for the past 20 years, PLANSPONSOR has published its annual Defined Contribution (DC) Recordkeeping Survey, a quantitative listing of DC providers. This year, we have renamed it and changed how we organized the data, to better provide snapshots of various DC industry segments.

Next, the 2018 PLANSPONSOR Plan Administration Guide, Part 2, is broken into four types of plans: 401(k), 403(b), 457 and nonqualified deferred compensation (NQDC). (Part 1, in PLANSPONSOR April–May, explored the provider marketplace for defined benefit [DB] plan, stock plan and health savings account [HSA] administration.) The decision to examine the markets in this way was, in part, driven by a recognition that plan sponsors focus on their own plan type and size when considering provider offerings. After each segment snapshot, we continue our practice of listing individual provider profiles.

As discussed on the following pages, within the 401(k) market, for instance, smaller plans may seek out adviser-centric service providers, and larger plans may want a vendor that can customize their platform. Annuity-based 403(b) providers have evolved their offerings to resemble their financial industry competitors’, and governmental 457(b) plans provide some benefits of 401(k) plans along with others uniquely their own. Nongovernmental 457 plans are limited in whom they serve, their market dominated by four service providers. The NQDC plan market, once serviced by two distinct types of providers, is now more blended.

In total, the guide presents 63 service providers, which manage a combined 486,671 DC plans. As to the individual service models, the 401(k) plan segment has assets of over $5 trillion on recordkeepers’ savings platforms; 403(b) plans have over $1 trillion in assets managed; 457 plans have $364 billion; and NQDC plans have $122 billion. Combined, this reflects an increase of 23% from the previous survey and the strong market returns of 2017 (all data are as of December 31, 2017). —PS