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It’s tough being a DC investment manager these days. Plan sponsors are offering fewer investment options within their 401(k) plans than in the past—an average of 13 today compared with upwards of 20 in previous years—and consequently are reducing the number of investment managers they include in their plan lineups all in an effort to
reduce plan costs. Brand awareness is down significantly for many DC investment managers this year, suggesting that plan sponsors are less eager to add new managers to their lineups than they have been in the past. As a result, consideration scores are lower for several investment managers this year.
Plan sponsors’ heightened focus on fees is even more evident in the reasons they cite for dropping an investment manager. For the first time in our survey, the desire to cut fees and expenses outranks investment underperformance as the most common reason plan sponsors would end a relationship with an investment manager. In fact, more than one-third (34%) of Mega plan sponsors, those with at least $500 million in plan assets, cite the need to reduce fees/expenses as a reason for dropping an investment manager. Continue reading