Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE 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
    • 2023 Defined Contribution East
    • 2023 ESG Investing
Breadcrumb
  1. Home
  2. DEFINED CONTRIBUTION
September 24, 2015 01:00 AM

Despite confusion, responsible investing a draw for DC plan participants, survey finds

Barry B. Burr
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Lynne Ford

    Updated with correction

    Responsible investing can have a powerful draw for 401(k) and other defined contribution participants and can help plan sponsors drive more participation and contributions, according to results of a wide-ranging new survey by Calvert Investments Inc.

    But the survey found much confusion among participants about the meaning of responsible investment, even though 87% of responding participants and 86% of responding eligible non-participants want investments aligned with their values.

    Some 37% of responding participants and 36% of responding eligible non-participants said they would contribute more to their workplace retirement plan if offered responsible investment mutual fund choices, while 36% responding participants and 33% of responding eligible non-participants said the availability of responsible investment fund choices would not affect their view of the retirement plan.

    Of responding eligible non-participants, 15% would be much more likely to participate in a workplace plan if responsible investment fund choices were available and 41% would be somewhat more likely, while 1% each would be somewhat less likely and much less likely. For the remaining 42% of responding eligible non-participants, the availability of responsible investment fund choices would have no impact on their decision whether to participate in a workplace plan.

    Responsible investment generated a great deal of enthusiasm among respondents.

    If a plan offered responsible investment fund options in all asset classes, 32% of all respondents would direct all plan contributions into the responsible investment mutual funds, 53% would direct a portion and 15% are unsure.

    Calvert's survey, conducted between July 29 and Aug. 10 by marketing research firm 8 Acre Perspective, received responses from 1,231 participants of defined contribution plans and 295 eligible non-participants. Some 80% of respondents participate or are eligible to participate in 401(k) plans, 14% in 403(b) plans and 6% in 457 plans, all across a diverse group of industries and pretty much evenly divided by region across the country. The total assets of plans of respondents weren't available.

    Gain understanding

    Calvert's research was driven to bolster understanding of three key issues, said Lynne Ford, executive vice president, Calvert Investment Distribution Inc., a unit of Bethesda, Md.-based Calvert Investments. Calvert's $13 billion in total assets under management, all in responsible investment strategies, includes $5 billion in institutional assets, largely from qualified workplace plans, Ms. Ford said.

    The first is a “long observed” disconnect between participants and intermediaries, including plan sponsors, and investment consultants, about the interest in responsible investment, Ms. Ford said.

    The second attempts “to understand whether including responsible investment in a plan or not would help achieve … objectives employers have” such as increasing participation and contributions in plans, Ms. Ford said.

    The third takes a look at whether a perception of a plan sponsor having a good retirement plan bolsters employee satisfaction and engagement with employers, and promotes the employer as a good place to work, Ms. Ford said.

    “One thing that we found interesting for plan sponsors is that both people who are participating in plans as well as people who are not participating but who were eligible … nine out of 10 people said (they would) like to have (investment fund) options aligned with our values,” Ms. Ford said.

    “We really see this (participant interest in responsible investment) as a trend and a finding consultants and plan sponsors need to know about,” Ms. Ford said. The findings “are really amplified when you talk about millennials and women.”

    “If as a fiduciary you are … responsible for getting more people to contribute (to plans), then looking at this data and understanding the positive impact it has on how people interact with the plan would be an important thing to do,” Ms. Ford said.

    “I can almost build a case (that) as a fiduciary you want to assess and offer responsible investment options as a way to broaden out what you offer (in investment fund choices) and get more people engaged in the plan.”

    Speaking about using the survey findings, Ms. Ford said: “Once we sort of educate plan sponsors, then (Calvert will look to) help plan sponsors educate participants” about responsible investment.

    The survey did not address whether participants believe responsible investment funds will help achieve retirement income objectives.

    “We didn't zero into retirement income specifically in this survey,” Ms. Ford said.

    The survey doesn't address fiduciary concerns, although Ms. Ford said Calvert has a 1998 Department of Labor letter not challenging responsible investment suitability.

    Confident on performance

    The survey found participants are confident about responsible investment performance and risk, while confused about the meaning of responsible investment. The survey didn't provide respondents with performance data or benchmarks.

    On performance, 23% of respondents believe responsible investment funds will perform better than other mutual funds, 47% believe they will perform about the same as other mutual funds and 17% believe performance will be lower, while 13% are unsure.

    On risk, 21% of respondents believe responsible investment funds will have lower risk than other mutual funds, 52% believe responsible investment funds will have about the same risk as other mutual funds, and 16% believe the funds' risk will be higher, while 11% are not sure.

    On fees, 23% of respondents believe responsible investment funds will have higher fees than other mutual funds, 48% believe the fees will be about the same, 17% believe fees will be lower, while 12% are not sure.

    Some 54% of responding participants “would be willing to pay a bit more for an RI mutual fund,” the survey found.

    “I personally don't feel it is wishful thinking (about performance),” Ms. Ford said. “It's being responsive to what (participants) see as successful companies in the world they live in.”

    Investment consultants and plan sponsors, who were not included in the survey, generally have “a long-held perception … that there's performance concern with responsible investment,” Ms. Ford acknowledged. “We have a lot of data that refutes that (concern) now. That (performance concern) doesn't hold true with (most) participants.”

    Not sure of definition

    On the meaning of responsible investment, 19% of respondents believe it means being responsible with money when investing, such as investing an amount a participant can afford or avoiding impulsive investments, while 9% believe it means saving enough for a rainy-day need or a great retirement or being “safe about investing,” and 11% associate responsible investment with a good investment return.

    Most respondents are unfamiliar with responsible investing: 36% of respondents never have heard of it and 27% are aware of it but knowing nothing about it, while 26% are somewhat aware of it and 11% very familiar with it.

    An even 50% of respondents weren't even sure if their workplace plans offer any responsible investment funds, while 28% believe their plan does and 22% believe their plan does not. On the other hand, 74% of respondents who think their plan offers responsible investment choices believe they have allocations to those investment options, while 18% believe they do not and 8% are not sure.

    “There is an opportunity for more education … because what we are seeing when we describe what is an opportunity to invest aligned with your values, people say, 'yes, I'm highly interested in that. I'd like to learn more.' The (participants) are looking for the plan sponsor to bring (responsible investment) to them,” Ms. Ford said.

    Consultants and plan sponsors “are on different wavelengths” from participants, Ms. Ford said the survey results show. “The investment professionals are not talking about (responsible investment) but individual investors are waiting to learn more.”

    The survey found a general overall interest and commitment by respondents to social and environmental causes, and sought to relate those priorities to inclinations involving responsible investment in workplace defined contribution plans.

    The survey breaks down some findings by generation of the respondents: millennials, Gen Xers, baby boomers. The findings show all generations list “saving for retirement” as their top priority in life among 12 choices that include “paying attention to world news,” “watching my favorite TV shows,” “dressing well,” and “eating at nice restaurants.” Of the life priorities, some 92% of baby boomers place saving for retirement on top, 90% of Gen Xers, and 86% of millennials. The findings show younger generations shift priorities more to stronger interest in responsible investment in workplace plans than baby boomers.

    Calvert produced a 55-page report, “DC Participant Engagement Research Report,” on the survey. A summary of the report can be found here.

    Related Articles
    U.S.-domiciled socially responsible investing assets jump 76% in 2 years
    PwC: Private equity LPs see added value in responsible investing
    CIO calls for more social responsibility
    Large managers increasingly using ESG factors in investment processes — report
    Department of Labor opens the door for ESG considerations
    Callan: DC plan executives focusing on investment policy, fees and compliance
    Recommended for You
    ONLINE_170809948_AR_-1_TIYUNLNPIEDC.jpg
    DC rollovers fuel IRA growth to $13.9 trillion, largest part of retirement market
    retirement income senior desk money_1550-main_i.jpg
    Non-qualified deferred compensation plans used to draw top talent, survey says
    Microsoft_Logo_i.jpg
    Microsoft to trim workforce, citing macroeconomic conditions
    Research for Institutional Money Management
    Sponsored Content: Research for Institutional Money Management

    Reader Poll

    January 25, 2023
    SEE MORE POLLS >
    Sponsored
    White Papers
    The Future of Infrastructure: Building a Better Tomorrow
    Fulcrum Issues: Equity Returns and Inflation — Choose Your Own Adventure
    What Matters Most in Considering a Private Debt Strategy
    Why pursue direct lending in the core middle market?
    Research for Institutional Money Management
    Are Factors a Thing of the Past?
    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
    December 12, 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 © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE 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
      • 2023 Defined Contribution East
      • 2023 ESG Investing