Fees have become the top reason that retirement plan sponsors switch providers, according to Spectrem Group.
Thirty percent of plan sponsors surveyed by the Chicago research firm cited cost and fees as the primary factor in a change in plan providers.
It was the first time in the surveys 19-year history that they were the main factor. Twenty-six percent cited poor service and 12% cited investment issues, said the report, DC Market Needs, released Monday.
Spectrem surveyed individuals who select and evaluate retirement plan providers at 1,052 companies with defined contribution plans. In 2005 cost/fees finished third (18%) to poor service (45%) and investment issues (26%). Fees also came in third in 1999 and 2002.
Spectrem said plan sponsors appear to have grown more knowledgeable about the fees they pay. Eighteen percent said in the online polling in May and June that they pay less than 1% of plan assets and 21% cited fees in excess of 2% of assets.
Spectrem said these responses are far more realistic than the ones plan sponsors provided in 2005, when a full 54% said they paid less than 1% of assets and just 4% said they paid more than 2% of assets.