Women who are administrators of defined contribution plans do a better job of managing than their male counterparts in key areas considered progressive practices by Morningstar, the research firm said Tuesday.
Morningstar found that female administrators were more likely than their male counterparts to use auto enrollment, offer default investments and practice good governance according to ERISA guidelines.
"We find that the probability of a plan offering these services is higher if the plan administrator is female, and the differences are statistically significant," a Morningstar research report said. "In other words, female plan administrators run better plans than their male counterparts."
Morningstar executives said they were unaware of any research assessing differences in DC plan performance due to gender.
"We wanted to understand diversity," said Julie Varga, vice president, investment and product specialist, in an interview. "We wanted to find factors that were unambiguous" that could link gender to plan operations.
Morningstar used the Form 5500 data to track auto enrollment, defaults and compliance with ERISA's Section 404(c) from 2009 to 2017.
The section serves as proxy for the good governance factor because its requirements, among other things, include offering a broad range of investments and providing adequate information to participants about investment options.
The firm chose 2009 because it was the first year auto enrollment and defaults were listed as line items in Form 5500, though Section 404(c) had appeared in the Form 5500 in earlier versions.
When researches compared female vs. male administrators over time with the growth of the three factors over time, they concluded women did a better job.
"The effect is incredibly strong," David Blanchett, head of retirement research, said in an interview, referring to the report, "Wonder Women: Why Defined Contribution Plans Benefit from Female Plan Administrators" (registration required).
Ms. Varga noted that women are playing a bigger role in DC plan administration. Using Form 5500 data, Morningstar said an average of 32% of DC plan administrators were women in 2000, rising to 42% in 2009 and reaching 49% in 2017, the last year for which research was conducted.
Meanwhile, the percentage of plans offering auto enrollment rose to 31.4% from 11.5% during this period. The percentage of plans using defaults — primarily target date funds — rose to 89.2% from 58.1%. The Section 404(c) compliance percentage rose to 95.3% from 87.3%.
"There is clear evidence that the probability of offering the respective service initially (2009) or adding (2017) is lower if the plan administrator is male," the report said.
Ms. Varga said the research took about six months. She said Morningstar welcomes comments about the results and methodology, adding that her firm may look at other variables to expand its research.
The study covered plans that had 100 or more participants at the beginning of a plan year. The number of plans that were examined varied each year. From 2009 to 2017, the number ranged from 45,338 to 50,641.
Using Social Security data, Morningstar established a probability that a plan administrator who signed the Form 5500 was male or female. For the 5.66% of names that were "somewhat ambiguous," such as Lee or Terry, researchers excluded them from their analysis.
