According to a press release, a new report from Spectrem Group, DC Market Needs, says nearly one-third (30%) of plan sponsors cited cost/fees as the primary factor precipitating a change in plan providers, surpassing poor service (26%) and investment issues (12%). In 2005, cost/fees finished third (18%) behind poor service (45%) and investment issues (26%), Spectrem Group said.
Eighteen percent of plan sponsors said they pay less than 1% of plan assets in fees, and 21% cited fees in excess of 2% of assets. According to Spectrem, these responses are far more realistic than plan sponsors provided in 2005, when 54% said they paid less than 1% of assets and just 4% cited more than 2% of assets.
George H. Walper, Jr., president of Spectrem Group, said, “The newfound focus on fees coincides with increased attention paid to fees and fee disclosure by the media and regulators over the past couple of years.” (See EBSA Issues New Participant Disclosure Regulations.) “Of course, sponsors’ greater scrutiny of fees puts pressure on providers to reduce them and, consequently, may impact margins in an already competitive market segment,” he added
The Spectrem report is based on the online polling, conducted in May and June, of individuals responsible for the selection and evaluation of retirement plan providers at 1,052 companies with defined contribution plans.
The report can be purchased here.