A Great Plan at the Right Price: Taking the "Institutional Approach"

When it comes to the quality of today’s employer-sponsored defined contribution plans, excellence is very much in the eye of the beholder. Majorities of plan sponsors believe their DC plan offers high-quality investment options (58 percent), an ample company match (58 percent) and effective financial education (55 percent)—all for reasonable, competitive fees (56 percent) and a competitive expense ratio (54 percent). However, most advisers and consultants say that their plan sponsor clients still frequently encounter problems in each of these areas. The findings come from a recent survey by亚博赞助欧冠机构投资者,与审慎合作，超过500人的资助者为401（k）计划，资产为5000万美元及以上，近300名顾问和顾问。

玻璃杯会向其他人看一半，一半是空洞的。几十年来，确定的缴款计划已经发展不仅仅是一个退休储蓄选项，其中许多人担任大多数私营雇主退休福利申请的中心要素。“计划在近年来改善了他们的个人资料，”洛里卢卡斯，Callan Associates的定义贡献实践领导者“，包括简化投资阵容，更多地利用自动注册和重新入入并保持减免。”但是，通常，计划赞助商仍然不愿意添加功能 - 例如，自动注册或重新创作 - 这可能有助于他们的参与者，但这可能会吸引监管机构和诉讼人的不必要的关注。“我们看到计划”的担忧，以尽量减少信托风险而不是最大化的结果，“卢卡斯增加了。

然而,在现实中,这两个目标不需要conflict. Consultants describe a road map that can help plan sponsors accomplish both: to minimize fiduciary risk and help guide employees to a successful transition into retirement. “Healthy plans are more institutional in focus,” says Lucas, with a well-defined management structure and processes that include regular review of the plan's features and investment options as well as a budget to support it—not unlike the structure that still underpins defined benefit plans at many large companies. Prudential believes that the regular review of plan wellness should cover three distinct areas:

• Industry trends:Reviewing and adapting the plan to the changing industry landscape to make sure the employer fulfills its fiduciary obligations and serves employees’ best interests;
• Plan design:优化计划功能，如自动注册，自动升级和公司匹配，以鼓励最大的员工参与;和
• Investments:Creating the right menu of investment choices and default options to help direct employees’ investing behavior and enable them to make decisions confidently.

Implementing more careful oversight in these areas can include greater reliance on outside advice and counsel. For the past three years, the investment committee at distiller Brown-Forman, which offers a 401(k) plan that currently has a total $448 million in assets and 2,600 participants, has worked closely with an independent investment adviser that has no role in providing investment options to the plans. “Previously, investment recommendations came from various individuals from the investment committee,” says Donna Wimbec, senior manager of global benefits compliance. Since then, the adviser makes recommendations on current and prospective investments in twice-yearly presentations to the investment committee and three-times-a-year presentations to the benefits committee. “This allows us to take a much harder look than we were able to do just within the investment committee,” says Wimbec.

At the outset, employers need to clarify their objectives in offering a DC plan—and show their own commitment by funding it. Plans that feature a sizable match “are much better designed and run in all aspects than those that are not committed to funding,” says Paul Denu, defined contribution practice leader at USI Consulting Group. If the plan includes auto-escalation, for example, the employer should ramp up its match as the employee’s contribution rises. “If it’s going to auto-escalate, the employer should show commitment too,” Denu says.

卢卡斯表示，“在机构目的，计划正在使用集体信托和单独的账户”保持费用。罗素投资的高级咨询分析师Mark Teborek表示，在计划的核心投资阵容中创造多元化是至关重要的，但不易实现：“你可以说你涵盖了所有传统的九种风格的盒子，但你可能不会真正多样化。”

Plan sponsors also need to think carefully about their employees' demographic profile and saving habits when designing the plan. Even auto-enrollment can be counterproductive if the initial default rate is set too low, since many participants may assume they do not have to contribute beyond that level, pulling down the average deferred rate, says Ryan Gardner, principal and senior consultant at Fiduciary Investment Advisors.

Employers increasingly are being urged to consider the 401(k) as an element in their total rewards package. At many companies, a manager of total rewards oversees the plan. In addition, a growing number of employers are providing access to education and advice that treat employees’ 401(k) assets as a component of their overall financial picture, including expected Social Security benefits, other assets and household debt. When employees acquire a better grasp of their overall finances, they not only experience less stress, which helps them to be more productive, but are better able to budget larger DC plan contributions. Additionally, both plan sponsors and consultants note that a financial wellness program is becoming a competitive necessity as more companies are offering them.

Taking a holistic view of an employee’s financial health also enables the plan sponsor to better gauge the participant's retirement readiness. This still begins with some fairly simple calculations. At International Paper, which has some $5 billion in 401(k) savings, officials ask three questions: What is the participation rate? What is the average contribution rate? What is the percentage of participants contributing at least enough to claim the full company match? Recordkeepers and third-party vendors have greater data analytic capability today, which allows them to calculate outcomes for employees: say, how long it would take them, and at what saving rate, to achieve an 80 percent income replacement rate in retirement. “Each vendor has their own methodology, but a reasonable replacement target seems to be becoming a standard offering,” says Gardner.

每个公司都以不同的方式基准，反映其行业和劳动力化妆。BMC软件拥有7亿美元401（k）计划的BMC软件比较其行业中的其他人的计划特征和性能，而且还与他的行业中的其他公司的计划相反，全球福利主任Natasha Taylor表示，纳塔什塔泰勒表示。

More sophisticated benchmarking gives plan sponsors a clearer view of how their DC plan stacks up against other companies', providing a better sense of whether their plan really is competitive across a range of features. In the end, however, consultants say, although offering certain features—a diversified core group of investment choices, auto-enrollment, a holistic approach to communication and education—is clearly important, equally significant is the employer's commitment to the plan in the form of resources, attention and ongoing evaluation of each offering.

ABOUT THE SURVEY

This study was developed by Institutional Investor, in partnership with Prudential, to identify the investment risks and behavioral challenges that need to be addressed throughout the retirement planning process and how plan sponsors, advisors and consultants are trying to overcome them.

To support this research, a survey was distributed to Institutional Investor's audience of plan sponsors as well as advisors and consultants between January and February 2016. We received 511 completed survey responses from the plan sponsor audience and 295 completed survey responses from advisors and consultants.

Auto Enrollment:An automatic contribution arrangement that can be used as a feature in a retirement plan to allow employers to enroll employees in the company’s plan automatically upon meeting eligibility requirements.

Auto Escalation:A plan design option that allows a plan sponsor to increase participant deferrals annually by a set increment.

RISKS:Investing involves risk. Some investments are riskier than others. The investment return and principal value will fluctuate, and shares, when sold, may be worth more or less than the original cost, and it is possible to lose money. Past performance does not guarantee future results. Asset allocation and diversification do not assure a profit or protect against loss in declining markets.

目标日期是投资者计划退休的近似日期，并且可能开始撤回金钱。目标日期基金的资产分配将通过减少股权暴露并增加固定收益型投资中的暴露，成为目标日期方法更为保守。目标日期基金投资的主要价值在任何时候都不保证，包括目标日期。没有保证基金将提供足够的退休收入。不应仅根据年龄或退休日期选择目标日期基金。参与者应在投资之前仔细考虑任何基金的投资目标，风险，费用和开支。资金不能保证投资，并且规定的资产拨款可能会有变化。通过投资证券可以赔钱，包括靠近退休附近和之后的损失。

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