Data & Research November 30, 2007

Two-Thirds of DC Plans Use Management Consultant

Sixty-nine percent of defined contribution plan sponsors use an investment management consultant, according to a new survey.
Reported by

One-third (34%) of DC sponsors pay service provider fees based on agreed-upon service performance levels, according to data from the Brookfield, Wisconsin-based International Foundation of Employee Benefit Plans (IFEBP). Just over half (55%) of DC sponsors said they look over their investment performance quarterly.

IFEBP said 54% of responding DC sponsors have a bundled arrangement with their investment service providers, 31% use an unbundled setup, and 8% use an alliance arrangement.
Some 45% of DC plans use target-date funds while 41% have an auto rebalancing feature in their plans, according to the press release.

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Defined Benefit Plan Trends

Meanwhile, on the defined benefit side, 88% of DB sponsors, hire consultants to help with plan investment management while almost all, 94%, use outside investment managers.

Nearly two-thirds, 65%, of responding DB plan sponsors review investment manager performance quarterly. About one-third of sponsors meet with their investment managers annually and a quarter does so only as necessary.

The survey reflects responses from 167 corporations, multiemployer trust funds and public/governmental employers in the United States and Canada.

More information is available at www.ifebp.org/surveysample.

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