Relationships between defined contribution (DC) plan sponsors and record-keepers are showing signs of strain, according to Callan Associates Inc.'s 2008 DC Fee Survey. While 82% of the sponsors surveyed indicated fees were presently in line with expectations, more than a third (34.8%) said they were very likely to renegotiate record-keeper fees this year and next. One in five (21.5%) anticipate switching to lower-fee asset classes. Only 13% said they were very likely to conduct a record-keeper search.
While the findings suggest that most plan sponsors are satisfied with their record-keepers, many of the respondents indicated fees are too high, according to Lori Lucas, Callan DC practice leader. Fee negotiations between plan sponsors and record-keepers may be further damaged by market volatility, as record-keepers who depend on asset-based fees for profits begin to feel the stress of the market decline on their bottom line, Lucas says.