Callan Associates

Defined Contribution Plans

Callan’s Defined Contribution (DC) Plan Services produce the depth of knowledge and resources to assist you in discharging your fiduciary responsibilities as a DC plan sponsor. Callan has the expertise to guide you through all phases of the DC plan management process with services for plan review and fee analysis, recordkeeping searches, and manager/fund evaluation and monitoring.

Callan offers defined contribution consulting services to:

• 401(k), 401(a), 403(b), and 457 plans
• Profit sharing plans
• Money purchase pension plans
• Thrift and savings plans

Plan Review and Fee Analysis

Defined contribution plan fees are increasingly coming under the microscope. The Department of Labor is currently working on several initiatives to increase disclosure and understanding of plan expenses. In addition, a number of lawsuits have recently been filed concerning defined contribution plan fees and disclosure. Most plan sponsors agree that fund expenses impact employees’ investment returns. Even so, truly understanding and benchmarking the appropriateness of defined contribution plan costs can be a daunting task. That is why, according to a survey of plan sponsors of large DC plans, while 71% of plan sponsors report that they are either somewhat or very concerned about total plan cost, only five in ten have attempted to calculate the total plan cost of their 401(k) plans. Concrete steps that plan sponsors can take to address concerns around DC plan costs are:

• Conduct a comprehensive cost structure analysis and benchmarking of the DC plan
• Revisit the way fees are paid
• Review approaches to fee disclosure

Recordkeeper Search

Callan regularly conducts defined contribution plan service provider searches and fee analyses for our clients; the process and results can help accomplish four objectives:

• Assist plan fiduciaries in documenting their awareness and understanding of how plan costs are paid
• Benchmark the plan’s current services versus industry best practices
• Establish an appropriate mechanism for paying plan expenses prospectively, given the plan size and asset scale
• Negotiate possibly more competitive fee terms with your provider

Manager/Fund Evaluation and Monitoring

Callan provides ongoing plan and investment manager monitoring to ensure that plan sponsors continue to have the knowledge and information necessary to meet their fiduciary responsibilities. We typically provide clients with quarterly performance measurement reports, including analysis of the current capital markets and a comparison of performance within each peer group. Reports can be delivered via hard copy or electronically.

Ongoing monitoring also encompasses your service providers to make sure service levels, new product development, and fees remain competitive. In addition to mutual fund/investment manager evaluation, we suggest a periodic evaluation of your recordkeeper and custodian within the context of industry developments. The transparency of recordkeeper and custodial fees has recently become an increasingly discussed topic for many of our plan sponsor clients.

The Callan DC Index™

The Callan DC Index™ is equally weighted and tracks the cash flows and performance of approximately 65 plans, representing more than 800,000 defined contribution participants and over $73 billion in assets. The purpose of the Callan DC Index™ is to understand the asset allocation of defined contribution plans, track defined contribution fund flows, and measure the performance of defined contribution plans. This Index is updated quarterly and reflects 401(k) plans as well as other types of defined contribution plans.