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February 16, 2021 02:00 AM

Plan sponsors to focus on plan fees, fiduciary training for 2021 – Callan

Rob Kozlowski
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    Defined contribution plan executives plan to emphasize the review of plan fees, completion of formal fiduciary training, and implement, update or review their investment policy statements or structures in 2021, according to an annual survey of sponsors by Callan LLC.

    In the report of its 14th Annual Defined Contribution Survey, released Thursday, Callan said defined contribution plan committees' top area of focus is governance and process.

    The survey for the first time this year also broke out administration fees and investment fees as one of the top five areas of focus that survey respondents could select. On a scale of 1 to 5, with 5 as the most focus, respondents gave plan governance and process a weighted average of 3.9, followed by investment structure evaluation and fund/manager due diligence 2.7 each, plan investment management fees at 2.3, asset allocation/diversification and participant education and communications at 1.2 each, and a weighted average of 1.1 was given for committee education/fiduciary training, qualified default fund selection and plan administration fees. Multiple choices were allowed.

    In the prior survey, the top areas of focus for DC plan committees were total plan fees, and participant education and communications.

    When asked what fiduciary actions DC plans expect to take in 2021, the top responses among the 13 actions from which respondents could choose were:


    • 54% said they would review plan fees (68% selected that answer for 2020).
    • 44% plan to complete formal fiduciary training (42%).
    • 42% will implement, update or review their investment policy statements (42%).
    • 34% will review investment structure (53%).
    • 25% will implement, update or review committee charters or delegations (43%).

    The most prominent fee initiatives for 2021 are: Conducting a fee study, mentioned by 71.2% as very likely or somewhat likely (up from 55.7% in the prior survey); and switching certain funds to lower-fee share classes, action cited as very likely or somewhat likely by 58.8% of respondents down from 66.7%).

    The report also noted fewer sponsors plan a record keeper search for 2021, with only 13.7% of respondents planning one for 2021, compared to nearly 25% last year.

    Multiple answers were allowed.

    Ninety-three large defined contribution plan sponsors responded to the online survey in September and October. More than 90% of plans represented had over $100 million in assets, and 61% had more than $1 billion in assets.

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