Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Retirement Income Conference
    • 2022 Managing Pension Risk & Liabilities
    • 2022 WorldPensionSummit
Breadcrumb
  1. Home
  2. Print
September 20, 1999 01:00 AM

SURVEY SAYS: 12% OF LARGE COMPANIES OFFERING DC ADVICE

Arleen Jacobius
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    LAKE WORTH, Fla. -- Close to 12% of large companies with defined contribution plans offer plan participants investment advice, according to a new survey by Insight In Formation.

    An additional 8.2% of companies with more than 3,500 employees and an average of $275 million in plan assets are planning to offer participants investment advice within the next 12 months, according to the survey.

    More than half -- 55% -- of company executives said they are providing investment advice because participants need it. The second most frequently stated reason, cited by 11.8%, was that employees have asked for it, according to the telephone poll of 874 companies. Another 10.8% of company executives indicated they provided investment advice in order to achieve plan goals such as increasing the participation rate.

    While investment advice still is not a hot item, the results of the survey indicate companies might be pushed into offering it by their younger employees, said Fred D. Barstein, managing director of Insight In Formation, Lake Worth, Fla.

    "Younger people take more responsibility for their investing and younger people are more comfortable with investing and the Internet," Mr. Barstein said.

    According to the survey, 11.4% of large companies offer Internet access to more than 75% of their employees, and 10.8% are planning to offer Internet access within the next 12 months.

    By far the greatest barrier to jumping into the investment advice pool -- mentioned by 61.5% of companies that are not contemplating giving investment advice -- is liability. The second most frequently mentioned reason, given by 9.9% of the 455 company executives who answered the question, said they did not plan to offer advice because it was the employees' responsibility to obtain investment advice privately. Another 8.1% said cost was a hindrance and 5.3% indicated they have other education methods.

    "Employers -- especially in the large companies -- are still hung up on 'what is my liability,' " Mr. Barstein said.

    He noted, however, the liability burden of companies could be eased a bit by offering the service.

    "If a participant loses money, companies that offer investment advice can ask 'What more could I have done?' " Mr. Barstein said. "If they are worried about liability, investment advice should be the first thing they should do."

    Still there are lingering fiduciary responsibility issues, pension lawyers said.

    "It's a very tricky line," said Ron Richman, partner in New York-based Schulte, Roth & Zable. "Even where an independent adviser is the fiduciary to the participants, the plan sponsor will be the fiduciary for purposes of selecting the adviser."

    The Insight In Formation study agrees with some of the results of the BARRA RogersCasey/IOMA 1999 Defined Contribution Survey released in July. That survey of close to 498 companies -- the majority of which had plans with assets of $25 million or less -- revealed plan executives are reluctant to provide investment advice. The primary reason is fiduciary concerns about crossing the line between education and advice. However, the BARRA RogersCasey study had a far rosier picture of the investment advice landscape in the 401(k) market. According to that study, 22% of small firms provide participant-specific investment advice and 29% of plan sponsors are considering offering advice in the future. Most of the plans surveyed said they are using their current bundled provider for the advice.

    An unintended result the Insight In Formation poll revealed is that even in the large plan market, not all executives understand what is meant by investment advice, Mr. Barstein said.

    The Insight In Formation poll was conducted in 1998 and again in March, April and May of 1999, he said.

    In 1998, a whopping 18.2% of executives at large plans surveyed said they offered investment advice. But, it turned out some company executives were confused about what constitutes investment advice, Mr. Barstein said. In 1999, executives at Insight In Formation refined the definition of investment advice and 8.2% of large companies said they offered the service, Mr. Barstein said.

    "We did not think they understood the difference between investment advice and education," he said.

    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    How low is low? Projections say it's not low enough
    How low is low? Projections say it's not low enough
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    ESG: Sustainability - Gaining Momentum
    Sponsored Content: ESG: Sustainability - Gaining Momentum

    Reader Poll

    June 6, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Nearing the finish line: Ideas on end-state investing for corporate DB plans
    The Meaning of "Portfolio Intelligence"
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Crossroads: Politics, Inflation, & Bonds
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    June 20, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Retirement Income Conference
      • 2022 Managing Pension Risk & Liabilities
      • 2022 WorldPensionSummit