Finance News & Insights

What are CFOs top retirement plan worries now?

Fiduciary risk has long been Finance chiefs’ top concern regarding their retirement plans. But it looks like fiduciary issues are keeping fewer of your peers up at night these days.

According to the most recent PLANSPONSOR/Janus Capital Groups defined contribution (DC) investment study, less than 11% of plan sponsors cited fiduciary risk as their top retirement plan concern.

That’s a significant drop from the 20% of plans who cited this worry back in 2012.

The fee issue

While plan sponsors are starting to worry less about fiduciary issues, they seem to have increased concerns about managing their plan fees, a major departure from the findings in previous studies.

In fact, just five years ago, low fees were the least important consideration for plan sponsors. In this year’s study, low fees were listed as one of the top three plan-selection considerations, behind performance and quality of underlying funds.

It’s certainly important for plan sponsors to worry about fees, especially since so many plan are relying on target-date funds, plan options that generally carry high fees. As CFOs are well aware, unreasonably high plan fees can lead to 401(k) lawsuits.

But experts warn against focusing too much attention on fees and putting fiduciary duties too far on the back burner. According to Russ Shipman, the managing director and senior vice president of Janus’ Retirement Strategy Group:

“Only focusing on fees, and not fully benchmarking or understanding the underlying makeup of a target-date funds, could potentially be a dangerous decision. Fund fees, while an important input into a well-designed and executed fiduciary process, should not necessarily be among the top defining priorities …”

 

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