NEW YORK, April 27, 2015 /PRNewswire/
-- AllianceBernstein L.P. ("AB") today announced new research
showing a decline in fiduciary awareness among plan sponsors from
several years ago. Even though all survey participants qualified as
plan fiduciaries, more than one-third (37%) aren't aware they are
fiduciaries. That's up from 30% in AB's last survey in 2011. The
research also indicates nearly half of plan sponsors don't take
advantage of the Department of Labor's QDIA (Qualified Default
Investment Alternative) safe-harbor protections.
Plan sponsors without a default option are less concerned with
improving participation or helping participants with their
investment decisions, the research confirms. They're also less
likely to know whether they are plan fiduciaries.
"There's a clear correlation between a lack of fiduciary
awareness and plan sponsors that are less concerned with increasing
employee engagement and protection in retirement plans," said
Dick Davies, Senior Managing
Director of AB's Defined Contribution business and co-head of North
American Institutions.
"What's comforting is that the adoption of target-date funds
(TDFs) is rising, and plan sponsors and participants alike want
more innovative products that are changing the retirement outcomes
for plan participants. These include guaranteed income TDFs,
multi-manager funds and other customization options available in
the DC marketplace."
The survey findings were compiled from AB's survey of plan
sponsors – the fourth since 2006. It offers a comprehensive look at
the behaviors, concerns and trends of where DC plans are today and
where they are headed. The full report is available at
www.abglobal.com/go/insidethemindsps.
Key findings include:
Fiduciary Awareness is Slipping: More than one-third (37
percent) of plan sponsors don't realize they're fiduciaries, up
from AB's 2011 plan sponsor survey results. But four of five (82
percent) plan sponsors said fiduciary matters are important or very
important.
- Plan sponsors with TDFs are more attuned to fiduciary
concerns: Plan sponsors with target-date funds take fiduciary
concerns more seriously: 87 percent said fiduciary concerns were
important or very important. That's more than the 77 percent result
from those planning to offer TDFs and 79 percent from those not
planning to offer them.
- Training makes a difference: Plan sponsors who don't
consider themselves fiduciaries were more likely to say their
organization doesn't provide training.
QDIAs Needed in More DC Plans: Too many plans either
don't use QDIAs—or any default at all. This means they're not
taking advantage of QDIA safe-harbor protections that provide legal
protections to plan sponsors. Roughly half of respondents don't
have QDIAs and one-fifth lack a default investment altogether.
- Small plans missing out most: Thirty-seven percent of
the smallest plans lack a default investment, versus just 13
percent of the largest plans.
- Confusion on plan default qualifications: One in five
respondents don't know if their plan's default is qualified.
Two-thirds of those with stable money or money funds as a default
say it's their QDIA, even though stable money and money funds are
only valid QDIAs for the first 120 days after a participant
enrolls.
It's Time to Transform TDFs: TDFs remain popular among
plan sponsors, but most haven't upgraded beyond traditional
prepackaged, proprietary mutual funds. This is true despite the
availability of other TDF options that might better serve
participants of various plan sizes.
- Smaller plans are starting to adopt TDF advances: Big
plans have been more likely to offer customized TDFs and options
that use funds from multiple managers, but these are gradually
becoming more available and attractive to smaller plans.
- Guaranteed lifetime income gaining momentum: The
majority (69 percent) of plan sponsors with at least $10 million in assets find guaranteed-income TDFs
appealing; 81 percent report that they are considering adding one
in the next three years.
Expanding Investment Offerings: There's demand among plan
sponsors to expand and improve core investment menus.
- Global bonds have room to grow. More than a quarter (26
percent) of plan sponsors report that their DC plans don't offer
global bonds. Global offerings, properly designed and with exposure
to multiple countries, can provide diversification and improve
risk-adjusted returns.
- Non-Traditional Investments are underused. Most plans
(58 percent) don't offer any nontraditional, or alternative,
investments to diversify traditional stock and bond exposures. Many
plans overlook real estate investment trusts (REITs) or
commodities, despite their being adopted by mutual funds and
exchange-traded funds (ETFs).
Automatic Enrollment Has an Edge: The number of plans
using automatic enrollment keeps rising—and so do participation
rates and other features associated with helping participants
through retirement, not just to retirement.
Education Can Help Advisors and Consultants Stand Out:
Many plan sponsors, especially those with less than $50 million in assets, need help navigating the
complexity of DC plans.
- Fiduciary challenges are a pain point: Nearly two-thirds
(63 percent) of plan sponsors report that reviewing fiduciary
responsibilities is an important service financial advisors and
consultants can provide. But 36% of plan sponsors don't provide
training to ensure that all plan fiduciaries understand their
responsibilities.
About the Survey
AB's DC team has conducted biennial
surveys of plan sponsors since 2006. These surveys help us
understand plan sponsors' perceptions and plans, enhance our DC
solutions, and ultimately help plan sponsors understand how to lead
participants to better savings outcomes and more comfortable
retirements. Our latest plan sponsor survey was conducted online in
early 2014. It included more than 1,000 respondents nationwide,
representing micro plans (with assets of less than $1 million), small plans (with assets between
$1 million and $9.9 million), midsize
plans (with assets between $10 million and
$49.9 million), large plans (with assets between
$50 million and $249.9 million) and
institutional plans (with assets of $250
million or more).
About AB
AB is a leading global investment management
firm that offers high-quality research and diversified investment
services to institutional investors, individuals and private wealth
clients in major world markets.
As of March 31, 2015,
AllianceBernstein Holding L.P. owned approximately 36.8% of the
issued and outstanding AB Units and AXA, one of the largest global
financial services organizations, owned an approximate 62.7%
economic interest in AB.
Additional information about AB may be found on our
website, www.abglobal.com.
SOURCE AllianceBernstein