Plan sponsors forecast change to DC investment menus

Fifty-one percent of defined contribution plan sponsors intend to revise the investment options they offer to plan participants. Fifty-one percent of defined contribution plan sponsors intend to revise the investment options they offer to plan participants.

Signaling a change in the defined contribution market, just over half (51 percent) of plan sponsors say they will modify their investment lineup over the next 12 months, new research reveals.

Cogent Research, Cambridge, Mass., discloses this finding in “DC Investment Manager Brandscape Report.” The research is based on a representative survey of more than 600 DC plan sponsors that select and/or evaluate investment managers and investment options for their respective 401(k) plans.

The report analyzes plan sponsors’ perceptions of 45 different DC investment managers and identifies those best positioned to capitalize on future growth potential.

The report discloses that 51 percent of defined contribution plan sponsors intend to revise the investment options they offer to plan participants, up from the 44 percent of sponsors that anticipated changes one year ago.

For many of the surveyed respondents, the changes are a priority: More than a third of DC plan sponsors cite reevaluating the investment menu among their top three priorities. And one in ten say it is their first priority for the upcoming year.

“All this attention to plan investments is a double-edged sword that presents both potential risk and opportunity for asset managers,” says Linda York, VP, Syndicated Division and lead author of the report. “In order to capitalize on this expected activity, firms need to ensure they match the right products and investment objectives to each segment’s needs and deliver on the key aspects that drive consideration.”

The report identifies the following companies as the top DC investment managers by aided consideration among plan sponsors

Rank

2013                      Firm

1                      Fidelity Investments

2                      Vanguard

3                      T. Rowe Price

4                      American Funds

5                      PIMCO

6                      Charles Schwab Investment Management

7                      OppenheimerFunds

8                      Franklin Templeton Investments

9                      Principal Funds

10                    BlackRock

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