PLANADVISER - November/December 2019 - 7

data points
Fund Lineup Sizing
Is a reduction of investment options good or bad?
S
ection 404(c) of the Employee
Retirement
Income Security Act
(ERISA) protects plan sponsors
from employees' poor investment
choices. It requires that a defined contribution
(DC) plan offer a minimum of
three investments that are diversified,
have risk and return characteristics
different from each other, and, when
combined, provide diversification for a
participant's overall portfolio.
Few, if any, plan sponsors offer just
three investment options. Instead,
sponsors and retirement plan advisers
continually question the number of
options in their DC plans. Behavioral
finance makes the case for decreasing
the menu because studies show people
are often confused by choice, selecting
limited options instead of an array.
Looking at recent years' PLANADVISER
Retirement
Plan
Adviser
(RPA)
Survey responses, menu options
increased by an average of 20% in
2015 through 2018-a period when
more than 60% of advisers reported
that " many/most " of their clients were
increasing the size of their fund lineups.
From a different perspective, PLANSPONSOR
Defined Contribution Survey
data indicate that plan sponsors varied
their menu option count from 2011
through 2014. On average, the number
of funds in a plan was 17.6 through
20.6 and then increased in 2015
through 2018, ending the cycle at 24.9
options. The average number of funds
decreased by 3.1 to 21.8 since last year,
similar to the 2018 through 2019 findings
in the RPA Survey.
However, a recent study by David
Blanchett at Morningstar found benefits
to having a larger core menu. Increasing
core menu size resulted in greater adoption
of the plan default investment:
from approximately 74% for plans with
10 funds in the core menu to approximately
87% for plans with 30. It also
found that
larger
fund lineups
led
active participants to build more efficient
portfolios. -Judy Faust Hartnett
Defined Contribution Investment Option Lineup Changes
The number of funds on DC plan lineups have:
n Increased for many/most of my DC clients
n Stayed the same for many/most of my DC clients
n Decreased for many/most of my DC clients
66%
61%
60%
65%
59%
28%
30%
32%
28%
25%
11%
2015
2016
10%
2017
Source: 2019 PLANADVISER Retirement Plan Adviser Survey
Number of Investment Options Offered in DC Plans
Average
Median
24.9
25
8%
10%
2018
8%
2019
22.6
21.4
21.0
20.6
20
18.0
18.0
17.6
17.0
16.0
15
2010
2011
2012
2013
2014
2015
Source: 2019 PLANSPONSOR Defined Contribution Survey
2016
2017
2018
2019
16.0
20.6
19.0
20.0
20.0
20.0
21.3
21.8
22.8
22.0
planadviser.com November-December 2019 | 7

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PLANADVISER - November/December 2019

Table of Contents for the Digital Edition of PLANADVISER - November/December 2019

Foul Weather Fund
2019 PLANADVISER Practice Benchmarking Survey
Streamlining the Process
To Surmount the Gender Gap
NQDC Guidance
Employee-Owned
Continued Growth
The Extent of Obligation
Cyberfraud
How to Protect Participant Data
PLANADVISER - November/December 2019 - C1
PLANADVISER - November/December 2019 - FC1
PLANADVISER - November/December 2019 - FC2
PLANADVISER - November/December 2019 - C2
PLANADVISER - November/December 2019 - 1
PLANADVISER - November/December 2019 - 2
PLANADVISER - November/December 2019 - 3
PLANADVISER - November/December 2019 - 4
PLANADVISER - November/December 2019 - 5
PLANADVISER - November/December 2019 - 6
PLANADVISER - November/December 2019 - 7
PLANADVISER - November/December 2019 - 8
PLANADVISER - November/December 2019 - 9
PLANADVISER - November/December 2019 - 10
PLANADVISER - November/December 2019 - 11
PLANADVISER - November/December 2019 - 12
PLANADVISER - November/December 2019 - 13
PLANADVISER - November/December 2019 - 14
PLANADVISER - November/December 2019 - 15
PLANADVISER - November/December 2019 - 16
PLANADVISER - November/December 2019 - 17
PLANADVISER - November/December 2019 - Foul Weather Fund
PLANADVISER - November/December 2019 - 19
PLANADVISER - November/December 2019 - 20
PLANADVISER - November/December 2019 - 21
PLANADVISER - November/December 2019 - 22
PLANADVISER - November/December 2019 - 23
PLANADVISER - November/December 2019 - 2019 PLANADVISER Practice Benchmarking Survey
PLANADVISER - November/December 2019 - 25
PLANADVISER - November/December 2019 - 26
PLANADVISER - November/December 2019 - 27
PLANADVISER - November/December 2019 - 28
PLANADVISER - November/December 2019 - 29
PLANADVISER - November/December 2019 - 30
PLANADVISER - November/December 2019 - 31
PLANADVISER - November/December 2019 - Streamlining the Process
PLANADVISER - November/December 2019 - 33
PLANADVISER - November/December 2019 - 34
PLANADVISER - November/December 2019 - 35
PLANADVISER - November/December 2019 - To Surmount the Gender Gap
PLANADVISER - November/December 2019 - 37
PLANADVISER - November/December 2019 - NQDC Guidance
PLANADVISER - November/December 2019 - 39
PLANADVISER - November/December 2019 - 40
PLANADVISER - November/December 2019 - 41
PLANADVISER - November/December 2019 - Employee-Owned
PLANADVISER - November/December 2019 - 43
PLANADVISER - November/December 2019 - Continued Growth
PLANADVISER - November/December 2019 - 45
PLANADVISER - November/December 2019 - The Extent of Obligation
PLANADVISER - November/December 2019 - Cyberfraud
PLANADVISER - November/December 2019 - How to Protect Participant Data
PLANADVISER - November/December 2019 - C3
PLANADVISER - November/December 2019 - C4
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