Defined contribution plan executives still have “quite a way to go” in understanding how fees are assessed, according to a survey by Callan Associates.
Thirteen percent of executives surveyed online by Callan last fall do not know what types of administrative fees are applied to their company stock fund, according to a news release from the consultant.
In addition, 19.4% of plans that have funds with revenue sharing “do not know what proportion of their funds pay revenue sharing,” and 37.5% of plans that credit excess revenue sharing back to plan participants “do not know how this happens,” the news release said.
“Given the amount of focus in the last year or so on fees, the results were surprising,” Lori Lucas, executive vice president and DC practice leader at Callan, said in a telephone interview.
Fees have been in the spotlight because of disclosure regulations that have been implemented by the Department of Labor regarding sponsors and participants, and other rules proposed by DOL regarding providers and sponsors.
“The sponsors are trying to make sure they have all ducks in a row for both regulations, but there's still a gap in understanding,” she said.
Among other survey findings:
- Fifty-eight percent of executives have done an investment structure evaluation in the past year. The most common reason for an evaluation was “to identify gaps and overlaps in fund lineup” and the next most important reason was diversification, the news release said.
- Nearly one-third replaced a fund or manager last year due to performance. “Most affected were large-cap domestic equity funds,” the news released said.
- Roth accounts are available in 53.8% of plans, and 55% of those plans also offer in-plan Roth conversions.
Executives at 99 plans with a total of more than $85 billion in assets were surveyed.