Survey DC Plans With Unbundled Providers to Add Options

By Staff Report

Nov. 5, 2008

Fifty-four percent of public and private defined-contribution plans that use unbundled providers said they plan to add to their lineup of investment options in the next 12 months, compared with 35 percent of those plans that use bundled services, according to a Spectrem Group report.

Also, DC plans using unbundled providers are likely to add employer stock, high-yield bonds and target-date funds as new investment choices, the report said. Twenty-five percent of DC plans using unbundled providers plan to offer employer stock and high-yield bonds, while 22 percent are going to offer target-date funds and 19 percent corporate bonds. Similar data were not available for DC plans using bundled providers.

The report, “Investment Manager Selection in the Defined Contribution Investment Only Market,” said DC plans using service providers that purchase unbundled services tend to offer fewer investment options (16) to their participants than those using bundled services (19).

The report also said strong performance and low investment management fees were the criteria ranked as most important in the selection and evaluation of plan investment providers.

The Spectrem report was based on data taken in May and June from 1,052 DC plan executives who were responsible for the evaluation and selection of plan service providers.

Filed by John D’Antona Jr. of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail

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