Callan’s 2020 Defined Contribution Trends Survey Shows Focus on Plan Fees and Participant Communication

SAN FRANCISCO – January 9, 2020 – Callan, a leading institutional investment consulting firm, announced today the results of its 2020 Defined Contribution (DC) Trends Survey. In its 13th year, the survey offers actionable insights for corporate DC plan sponsors. You may view the survey here.

Conducted by Callan in the fall 2019, the survey incorporates responses of 114 plan sponsors—including Callan clients and other organizations. The survey highlights key themes and findings from 2019 and expectations for 2020. Top priorities for the coming year are plan fees and participant communication.

“We are grateful for the tremendous participation from our clients and non-clients in helping create such a robust survey,” said Greg Ungerman, co-author and Callan DC practice leader.

Survey Highlights

As in prior surveys, the majority of respondents (86%) offered a 401(k) plan as the primary DC plan. More than 90% of plans in the survey had over $100 million in assets, and 64.6% were “mega plans” with over $1 billion in assets.

  • Fees: For the fourth year in a row, plan sponsors ranked reviewing plan fees as the most important step they took to improve their plan’s fiduciary position. Fees will also be the main priority in 2020.
  • Communication: Participant communication closely followed fees as the top area of focus for 2020—with financial wellness ranking No. 1 for the third consecutive year.
  • Roth: 87% of plans offer a Roth feature, an all-time high.
  • Cybersecurity: Despite being a newsworthy topic, cybersecurity only slightly increased in priority from last year.
  • Target date funds: 93% of DC plans offer a target date fund, and the prevalence of custom solutions increased modestly to 17.3% in 2019.
  • Advisory services: The majority of plan sponsors (95.4%) offered some form of guidance/advisory service to participants.

“With the amount of fee-related project work we see, it’s not surprising fees continue to be a top priority for 2020,” said Jamie McAllister, co-author and Callan DC consultant. “What is surprising: Over 45% of sponsors don’t evaluate indirect revenue as a part of their fee review. Since indirect revenue from sources such as managed accounts or rollover assets can be a meaningful amount, we feel it’s important to be considered in the overall fee evaluation.”

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About Callan
Callan was founded as an employee-owned investment consulting firm in 1973. Ever since, we have empowered institutional clients with creative, customized investment solutions backed by proprietary research, exclusive data, and ongoing education. Today, Callan advises on more than $2 trillion in total fund sponsor assets, which makes it among the largest independently owned investment consulting firms in the U.S. Callan uses a client-focused consulting model to serve pension and defined contribution plan sponsors, endowments, foundations, independent investment advisers, investment managers, and other asset owners. Callan has six offices throughout the U.S. Learn more at callan.com.