However, that option was significantly more appealing to micro and smaller employers.  Mega employers were more inclined to do so via some kind of third-party advice provider (42.1%), while large and mid-size plans were somewhat more inclined to do so via their DC plan provider.  That said, there was a distinct and noticeable trend across market segments toward offering help. 

Beyond the particulars of participant-level advice, nearly two-thirds of plan sponsor respondents—and nearly half of even the largest programs—now rely on the services of a financial adviser.  Larger programs, notably those in the large and mega segments, were significantly more likely to claim that their adviser’s fee arrangement was based on a flat fee/retainer (61% and 60%, respectively), while micro and small plans were more inclined to cite adviser fees based on plan assets (54.2%, and 59.6%, respectively).  Mid-size plans were split nearly evenly between those two options in the arrangements they had in place.   

Significantly, there was movement in every market segment away from fees based on plan assets and toward some form of flat-fee arrangement. 

When it comes to evaluating their advisers, plan sponsors put the highest priority on service to the plan committee/sponsor over plan participants, a finding consistent with prior years.  In fact, industry knowledge (doubtless to be deployed in the service of the committee/sponsor) outpaced participant service.  Transparency of fees was ranked below service to plan participants, but it moved up sharply in priority from a year earlier—and it was well ahead of reasonableness of fees.

Menu Driven

The number of investment options offered rose slightly in this year’s survey; 21.4 from 19.5 a year ago (the median number rose from 17 to 18), and they generally were higher across all market segments.  Moreover, the average number held by participants also edged up—6.3 in this year’s survey from 5.3 a year ago—while the median rose to 5.0 from 4.5 in the 2009 survey.  This, too, was up across the board, though the increase was more pronounced among smaller plans.

This year’s plan sponsor respondents were, in aggregate, predisposed toward an annual review of plan investments, but there was a great deal of disparity based on plan size.  For example, nearly half (47.4%) of micro plans conducted that review once a year, but those in the small market were as likely to do so on a quarterly basis as once a year.  Mid-size plans were four times as likely (60%) to conduct a quarterly review as an annual one, and large plans three times as likely to do so (60% versus 20.4%).  Those trends were largely in keeping with the findings of the 2009 survey. 

Most of this year’s respondents indicated they had an investment committee for their DC plan, though larger programs were significantly more likely to fall in that category.  For example, more than 90% of the respondents at mid-size, large, and mega plans did, and more than 80% of those in the small category did, while roughly 60% of micro plans did not.  Committees composed of non-employees only were a distinct minority, while those consisting of internal employees only dominated the results.   

Not surprisingly, there was a strong correlation between the existence of a written investment policy statement (IPS) and those investment committees, with roughly 90% of plans mid-size and above claiming to have one, while only about a third of micro programs did.   

However, despite their prevalence on the investment menu, only about a quarter of responding plans said that that IPS specifically covered target-date funds and their underlying funds.  On the other hand, a full third of this year’s respondents did not know if their IPS covered those offerings.