By Hal M. Bundrick NEW YORK ( MainStreet)--Advisors adept at navigating the employer-sponsored retirement plan landscape may find greater opportunities in the months ahead. More plan sponsors are contemplating a switch in plan providers, according to the annual Retirement Planscape report issued by Cogent Research, a firm recently acquired by Market Strategies International. In an abrupt reversal of attitudes from just two years ago, more plan sponsors -- nearly one-third (32%) -- are considering a change, while fewer (63%) say they have complete loyalty to their current provider.
Most of the potential movement is found in the smaller plan market, with 39% of micro (less than $6 million in plan assets) and 31% of small ($6-$20 million in plan assets) plan sponsors saying they are "somewhat likely to move to another plan provider in the upcoming year." One-quarter of mid-sized plans ($20-$100 million in plan assets) are considering a switch of providers, while the sponsors of the largest plans seem most content with their current provider. Only 14% of large ($100-$500 million) and 9% of mega plans ($500+ million) are thinking about making a move.
New fee disclosure regulations may be spurring the shopping trend, as administrative fees are listed as the primary motivation for switching providers by 21% of all survey respondents. The desire for fee-reduction is even more distinct among larger plans as fully 40% of plan sponsors with $100 to $500 million in assets under management name administrative fees as the reason for shopping their plan. Other reasons for considering a change, as listed by all plan size respondents were: service quality (20%), quality and range of investment options (12%) and investment performance (8%). Investment management fees, as well as participant guidance and advice both garnered 7%.
Change seems to be in the air for plan sponsors, if not in moving to a new provider, at least in tweaking plan investments. More than half (51%) of plan sponsors say they expect to make a change in their investment options in some manner in the coming year -- whether increasing or decreasing the number of available investments, or changing the lineup of investment options.