PLANSPONSOR - April/May 2021 - 11

contingent upon the sponsor, Pastor
says. Employers may select the range of
investments that SDBAs offer; still, even
limited choices in an SDBA are more than
what the plan menu offers, she points out.
Flexibility at the participant level is
another reason DC plan sponsors may
supply the option, especially for experienced
investors who like to control their
finances, Voris says. " This is a space for
participants who want more flexibility,
are more engaged with their retirement
savings and want to invest beyond
what's offered in the core menu, " he says.
Additionally, many participants who
leverage a brokerage window have a financial
adviser who is attached to the feature.
Plan sponsors should consider
implementing some barriers if offering
an SDBA, however, Voris says. One
commonly cited con to the accounts is
their fees, which may be higher than fees
on the plan's core menu.
" What you don't want is a window
[where] fees may be above and beyond what
the average 401(k) participant is paying, "
Voris says. Yet, he adds, trading and other
administrative fees have been declining as
providers lower or remove maintenance
charges. Still, he recommends that sponsors
check in with their recordkeeper and other
providers when considering the option, to
assess whether fees are reasonable.
Another con-and a plan sponsor
concern-is participants misusing the
brokerage window. Voris says many
employers worry that participants will
use the option to day trade, although
Schwab data show that SDBA users
traded approximately 14 times a quarter
last year. Some sponsors are concerned
about investors who lack the discipline
to manage their portfolios wisely during
market volatility.
As to these scenarios, Pastor says
she believes it is up to employers to act,
such as by allowing participants to hire
a third-party financial adviser for help.
" Plan sponsors need to go a couple of
extra steps beyond just offering the
SDBA, " she says. -Amanda Umpierrez
SURVEY SAYS
Retirement Income Options
ANNUITIES have been touted as the answer to retirees' need for steady retirement
income, and, as of last year, thanks to the Setting Every Community Up for Retirement
Enhancement (SECURE) Act's safe harbor provision, plan sponsors may confidently
offer them. This has put a greater focus on the goal of providing guaranteed lifetime
income for defined contribution (DC) plan participants. Plan sponsors now face the
decision of whether to offer annuities for their participants-and the decision of
whether to offer the opportunity within the plan or outside of the plan. Recently we
asked our NewsDash readers ...
Does your defined contribution plan offer an annuity
option as part of its investment lineup?
91%
Offers no
annuity option
5%
Offers annuities
as a standalone
feature
4%
Have saved money
in their plan's
annuity option
If it did, would you put some of your savings into it?
27%
Said they would
32%
Said they don't
know
Note: More than 68.2% of respondents work in a plan sponsor role; 18.2%
are recordkeepers/third-party administrators/investment consultants; and
13.6% are advisers/consultants.
Source: PLANSPONSOR NewsDash readers
41%
Said they
would not
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