This is up from an average of 2.8 a year ago, according to the “DC Investment Manager Brandscape” report from Cogent Reports of Market Strategies International, based on a survey of 585 401(k) plan sponsors. The increase signals an upsurge in competition for defined contribution (DC) investment managers, as well as an opportunity for DC investment only (DCIO) firms that don’t offer their own recordkeeping platforms, Cogent says.

Meanwhile, the average number of investment options on the platform is 19, the same as last year. Additionally, 34% of plan sponsors expect to change their investment lineup over the next 12 months, suggesting they will be scrutinizing their offerings.

“Driving these trends is the momentum of open architecture moving down market and their heightened desire on the plan sponsor’s part for best-of-breed managers,” says Linda York, vice president and author of the report. “As recordkeepers continue to expand the number of fund managers on their platforms, new opportunities open up for DCIO providers to present their product offerings to a new set of potential clients,” she says.

Asked what criteria they consider when selecting an investment manager, the sponsors first cited fees, and then brand reputation and history of delivering strong, consistent investment performance.

“The current leaders in brand awareness, favorable impression and consideration are also formidable competitors in the recordkeeping market, but we do see a handful of DCIO firms successfully breaking through the clutter and anticipate the competition will heat up as more plan sponsors evaluate options beyond the proprietary offering of their plan provider,” York says.