Defined contribution plan executives that changed record keepers or primary investment managers within the past 24 months said improving plans was a major reason for the switch, followed by dissatisfaction with investment performance, according to a Spectrem Group survey.
Eighty-five percent of respondents “cite upgrading the plan as one of their motivations (for changing record keepers or primary investment managers) compared to just 54% who mention poor performance of the previous provider,” according to a report on the survey results.
However, while 27% of plans said they were very satisfied with the new provider and 45% said they were somewhat satisfied, 22% said they were somewhat dissatisfied and 6% said they were very dissatisfied, according to the report.
On average, the report said, a plan stayed with its previous provider for 6.6 years, although 29% switched after three years or less. “This indicates they either purchased a plan that turned out to be inadequate for their needs or that the performance of the provider was seriously short of their expectations,” the report said.
“We talked to people at companies where the emphasis was on upgrading their plans and wanting more features,” Gerald O’Connor, a Spectrem director and head of the consulting firm’s research practice, said in an interview.
Ninety percent of the plans in the survey were 401(k) plans, he said. The survey covered middle-market DC plans, which the firm defines as those with assets from $10 million to $200 million.
The survey of 595 finance and/or human resources executives at DC plans was conducted in April.