Benefits August 11, 2003

Study: 401(K) Sponsors Are Happy With Their Providers

August 11, 2003 (PLANSPONSOR.com) - The vast majority (94%) of 401(k) plan sponsors are satisfied with the overall performance of the companies managing their plans.
Reported by

Overall, 94% of those sponsors polled by the SPARK Research Group expressed some satisfaction with their plan providers, with 68% saying they were very satisfied. This represents an improvement over 2002’s numbers when 92% were satisfied overall and 61% very satisfied.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

In fact, the latest release shows the highest satisfaction levels since the survey began in 2000. This comes despite the fact that most sponsors (55%) said assets in their plans had decreased over the previous 12 months, compared with just 39% that reported an increase and the 6% that have had their balances remain the same.

Perhaps though, plan sponsors’ optimism is beginning to shine through. Virtually all sponsors polled (99%) believe the stock market has bottomed-out, with seven out of 10 feeling the market will rise over the next year. “As the retirement market comes off a third year of weak investment performance, plan sponsors are proving to be resilient and hopeful, and participants continue to rely on the plans for retirement savings,” said Warren Cormier, co-director of SPARK.

Plan Cross Section

The study also found that even with some high profile companies cutting their employer 401(k) match, the overall percentage of companies offering a match has remained the same over the last three years (87%). Further, of the companies examined, the average number of investment options is 14, and only one out of five (21%) offer a self-directed brokerage option.

This comes at a time when participants seem happy with their plans, based on overall satisfaction levels and the percentage of eligible employees participating in 401(k) plans is the same as it has been since 2001 (76%).

The study, DCP Plan Sponsor 2003, is an examination of plan sponsors covering their satisfaction with and loyalty to providers, the brand/image of more than 20 leading providers, and plan design and sponsor behavior. It is based on telephone interviews with human resources or financial decision-makers at 1607 companies with plan assets of at least $5 million and a median number of employees at the surveyed companies of 560. More information can be obtained by contacting Jeff Close at (860) 658-5058.

Administration August 10, 2003

UK Regulator Defends Fee Disclosure Proposal

October 8, 2003 (PLANSPONSOR.com) - A UK financial regulator claims the hidden costs of a proposed shakeup of the nation's fund management and equity brokerage industries are "minimal."
Reported by

Gay Huey Evans, head of the market and exchange division of the Financial Services Authority (FSA), made the assertion after the UK regulatory body came in for criticism for its reform notions aimed at forcing a full disclosure of brokerage costs by fund managers, according to the Financial Times. The proposal includes disclosure of soft dollar or “soft commission” practices.

Evans said it was important for the regulator to examine the costs fund managers incurred on behalf of their clients. “Just because the costs may be minimal does not mean we should not be looking at them,” she told a conference of the Investment Managers Association (IMA), according to the newspaper.

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

The FSA has proposed that fund managers’ brokerage costs through commissions for services ranging from research to access and flotation should be “unbundled.”   The market regulator is concerned that by lumping charges for various services into one opaque sum, hidden costs have been passed through by fund managers to clients. The regulator is also waging war on “soft commissions” – the practice of fund managers directing dealing business to brokers who supply them with services or goods. These include such services as market information systems.

However, the IMA has criticized the FSA for pursuing reforms with “unquestionable risks,” even though an FSA-commissioned study concluded the detrimental effects of unbundling were relatively limited.

The average commission rate in 2002 was 14 basis points, according to Oxera, a consultant hired by the FSA. This included 3 basis points for research.

«