401(k) plan sponsors consider changes to investments, record keepers – Fidelity study

401(k) plan sponsors are looking to revamp their investment lineups and replace their advisers and record keepers, according to a study released Tuesday by Fidelity Investments.

Almost half of the 1,285 plan sponsors surveyed (47%) said they were actively seeking a new adviser, up from 34% that said so in 2021. The need for better employee communications as well as superior investment menus offered by rival advisers were cited as the top reasons for plan sponsors wanting to switch.

“Plan sponsors are continuously seeking more expertise from their plan advisers year-over-year to help them in a more diversified capacity and are not afraid to look elsewhere if a competing adviser offers a better experience,” said Elizabeth Pathe, senior vice president and head of defined contribution investment-only sales at Fidelity Institutional Asset Management, in a news release.

Record keepers, too, will be feeling the heat of competition as 48% of plan sponsors said they were considering dumping their current record keepers, the survey found.

The majority of plan sponsors (93%) also reported planning to make changes to their investment menu lineups, with 27% looking to expand the number of environmental, social and governance funds. Other top planned changes included increasing the number of investment options (27%) and increasing the number of managed account options offered (26%).

More than 4 in 5 plan sponsors (88%) also said they were planning to make design changes, with 27% reporting a planned increase to their matching contribution.

The survey was conducted during March. Participating plan sponsors had at least 25 participants and at least $3 million in plan assets and worked with a variety of record keepers.

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