Selecting the highest-quality service providers for defined
contribution (DC) plans has never been so important and
difficult. With heightened fiduciary concerns owing to
increased lawsuits and regulations, DC plan sponsors need to be
more vigilant than ever. One place to start: hiring the right
Institutional Investors inaugural DC Industry Leaders
study identifies the industrys top recordkeepers, DC
investmentonly (DCIO) firms, and distributors based on
surveys of plan advisers managing at least $100 million and
more than $500 million on average.
Respondents rated Legg Mason as the best DCIO, whereas
Captrust came in first among broker-dealers and registered
investment advisors (RIAs) providing services to plan advisers.
Merrill Lynch earned high marks in two categories, ranking as
the No. 1 retail DC recordkeeper and second-best
The only other firm to crack the top five across two
categories was T. Rowe Price, which ranked high for both its
recordkeeping and its DCIO services.
Most recordkeepers offer the same services, making it
difficult to determine which ones are doing a good job overall
and are likely to remain viable in a consolidating
market, says Fred Barstein, founder of 401kTV, who
advised on the study. It is important to know which
providers offer the best services to plan sponsors and their
The study marks the first time support services from
broker-dealers have ever been rated. The surveys design
and methodology were developed with guidance from Barstein,
Boston Research Technologies president Warren Cormier, and an
advisory board of leading institutional plan advisers.
By focusing on wisdom from DC plan advisers that have
more than $100 million in DC AUM, these results can help the
entire industry to fulfill their roles and improve their
respective businesses, Barstein says. Selection and
monitoring of DC providers will finally become more
institutional a long time coming for the
retail DC marketplace.
The best retail DC recordkeepers as rated by DC plan
1. Merrill Lynch
2. T. Rowe Price
The top five DCIOs are:
1. Legg Mason
3. J.P. Morgan
5. T. Rowe Price
Broker-dealers and RIAs providing the best services to plan
2. Merrill Lynch
3. Morgan Stanley
In addition to these results, in early September II will be
naming the top 50 institutional plan advisers by region.
Theres a glaring need for and lack of credible
ratings in the retail DC market, Barstein notes.
Hopefully, this study is just the beginning of efforts to
bring institutional-grade research and due diligence to the
retail DC market something that is sorely needed,