M&A activity and healthy business growth are now the main triggers for switching 401(k) registrants
New Plan Sponsor Data from Cogent Syndicated Reveals Lower Plan Provider Tenure Among Large-Mega Plans; Meanwhile, cybersecurity threats dominate fears
LIVONIA, Mich., June 25, 2024 (GLOBE NEWSWIRE) — A new Syndicated Cogent Escalent report reveals that mergers and acquisitions (M&A) and healthy business growth have emerged as key catalysts for recent plan provider changes among 401(k) plan sponsors that have switched recordkeepers over the past two years, accentuating some of the most recent challenges in today’s Market.
In a sharp departure from last year, when overall quality of service for participants was the most dominant trigger for switching plan providers, enrollees must now pay attention to several factors: Overall quality of service for sponsors of the plan, organizational mergers and acquisitions and growth in the number of employees. and/or plan assets. These are among the main conclusions of the Escalante2024 Retirement Plan® report.
“Historical plan providers may be tempted to believe that corporate growth is purely positive, given the potential for increased assets and plan participants, but they should be vigilant,” said Sonia Davis, lead author of the report and senior director of products. from Cogent Syndicated. “Healthy growth and M&A activity may lead plan sponsors to reevaluate and improve their retirement plan benefit offerings in the spirit of being equitable to all parties.”
In fact, average plan provider tenure is trending lower among Large-Mega plans, which are defined as plans that hold at least $100 million in assets—a sign that challenger companies are beginning to have greater success in unseating the incumbents of this group. The average registrar tenure is 7.5 years across Grande-Mega plans, down from 8.4 years in 2022.
However, for the first time in the history of this study, cybersecurity threats/data breaches eclipse the poor performance of plan investment options as plan sponsors’ biggest fear regarding management of the company’s 401(k) plan. your organization. Cybersecurity concerns have increased significantly, from 40% in 2022 to 47% in 2024. In turn, anxieties around poor performance have decreased to some extent, from 57% in 2022 to 45% this year.
“Cybersecurity threats previously served as a top concern among Large-Mega plans, but now serve as the most dominant fear across all plan-sized groups. Vendors must be very explicit when presenting their data security and cyber risk management practices,” said Davis. “As mergers, acquisitions and cybersecurity concerns take center stage, it is imperative that record holders clearly communicate their offerings. By maintaining high-quality services and security standards, record holders will be prepared to capture new opportunities and maintain relationships with their existing customers.”
About Retirement Planscape®
Cogent Syndicated, a division of Escalent, conducted an online survey of a representative cross-section of 1,391 401(k) plan sponsors from February 14 to March 12, 2024. Survey participants were required to have shared or sole responsibility for plan design, administration, or selection and evaluation of plan providers, or for evaluation and/or selection of investment managers/investment options for 401(k) plans. In determining the sampling frame for this study, Cogent relied on recent Form 5500 filings maintained by Judy Diamond Associates of ALM. To ensure that the population for this survey is representative of the universe of 401(k) plan sponsors, quotas were set during the data collection phase around key firmographic variables, including total plan assets, number of plan participants, industry, and geography. Minimum weighting was applied to adjust for intentional deviations from the actual market distribution. Data have a margin of error of ±2.63% at the 95% confidence level. Escalant will provide the exact wording of any survey question upon request.
About Escalante
Escalent is an award-winning data analytics and consulting company specializing in industries facing disruption and business transformation. As a catalyst for progress for more than 40 years, we accelerate growth by creating a seamless flow between primary, secondary, syndicated and internal business data, providing consulting and advisory services from insights to implementation. We have 2,000 team members, following the acquisition of C Space and Hall & Partners in April 2023. Escalent is headquartered in Livonia, Michigan, with offices in the US and Australia, Canada, China, India, Ireland, Philippines, Singapore, South Africa, United Arab Emirates and United Kingdom. Visit escalant.co to see how we’re helping shape the brands that are reshaping the world.
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CONTACT: CONTACT: Kim Eberhardt 248.417.2460 keberhardt@identitypr.com
