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The defined contribution (DC) plan market is increasingly dynamic with a wide array of industry forces, priorities and innovations in play. In the wake of on-and-off industry reform and legislation along with a continual stream of fee-related litigation, DC plan sponsors are being courted with the latest solutions designed to propel participant engagement, foster financial wellness and, ultimately, increase participant retirement readiness. Yet many are still struggling with the perennial challenges of managing plan costs and navigating the myriad of fees associated with offering their employees a competitive 401(k) plan.
As the DC industry modernizes and becomes more efficient, the struggle with plan fees continues to hover over many organizations, exposing a disconnect between plan providers and plan sponsors. While Micro plans remain the most fee-sensitive segment, Small-Mid plan sponsors appear to be experiencing the most angst and are poised to take more definitive action this year, reporting an increase in likelihood of launching a formal 401(k) plan review or switching DC plan providers. In contrast, Large-Mega plans, which command higher rates of negotiating power, enjoy the freedom to think more holistically about participant needs and are better-positioned to harness the latest innovations.
That said, DC plan providers and DC investment managers must become better-adept at identifying the most effective ways to engage and educate each segment of the market on their unique brand differentiators and back it up with superior client service. Such outreach spans everything from crafting effective social media campaigns and determining which mediums to promote thought leadership to partnering with DC advisors and consultants who serve as influential educators and decision-making facilitators.
This year’s Retirement Planscape® report, published in May, provides a comprehensive and unique view of the key trends in the DC plan sponsor market and identifies the competitive strengths and weaknesses of the leading 35 DC plan providers and 46 DC investment managers. For more information on the full report, review an overview.