Morningstar’s initial retirement report shows ‘alarming’ DC plan shrinkage

Morningstar’s initial retirement report shows ‘alarming’ DC plan shrinkage
Jack VanDerhei, formerly director of research at EBRI, joins the firm’s new unit.
MAR 01, 2022

In its first report, the new Morningstar Center for Retirement and Policy Studies has found that an “alarming” amount of money, $4.61 trillion, flowed out of defined-contribution plans from 2011 to 2020.

“These constant outflows, likely due mostly to rollovers and cash-outs, reduce plan assets,” Morningstar said in a release. “More assets in the defined-contribution system would help more sponsors gain the leverage to demand lower fees from asset managers and drive down costs for end investors.”

In addition, the report found that some people who participate in small plans pay around double the cost to invest as participants at larger plans.

“This is an issue industry leaders and policymakers must address because these differences in fees can add up, leaving participants with fewer assets at retirement and less ability to achieve their retirement goals,” Morningstar said.

The company said it created the center to dive more deeply into areas like plan investment holdings, plan quality and participants costs.

The Center's primary research team includes Aron Szapiro, head of retirement studies and public policy at Morningstar Inc./Morningstar Investment Management, as well as Jack VanDerhei, director of retirement studies for Morningstar Investment Management, and Lia Mitchell, senior analyst of policy research for Morningstar Inc.

VanDerhei joined the firm Tuesday and will be responsible for modeling the impact policy changes and proposals might have on U.S. retirement preparedness, as well as the effects of plan sponsors' decisions on participants. He was previously research director at the Employee Benefit Research Institute.

Independence still popular as recruiting recovers

Latest News

Broker-dealer index takes off post-election
Broker-dealer index takes off post-election

The results of Tuesday’s election create tailwinds for the wealth management industry.

Trump re-inherits Social Security's problems, and another change to fix them
Trump re-inherits Social Security's problems, and another change to fix them

The next president has proposed cutting Social Security benefits taxes, which would deplete the system faster. Bipartisan support is needed to pass reforms, observers say.

Before M&A, consider ‘process and culture’
Before M&A, consider ‘process and culture’

Several panelists highlight actionable strategies and advice for RIAs ahead of RIA Activate California. Register today!

Harris paid the price for inflation. Now, advisors explain how to get ahead of it.
Harris paid the price for inflation. Now, advisors explain how to get ahead of it.

Wealth managers offer strategies for portfolio protection against the scourge of inflation.

Raymond James strengthens Eastern US network with Edward Jones advisors
Raymond James strengthens Eastern US network with Edward Jones advisors

The broker-dealer giant's latest additions in Florida, North Carolina and Georgia are starting anew at RayJay's independent advisor channel.

SPONSORED Out with the old and in with the new: a 50% private markets portfolio

A great man died recently, but this did not make headlines. In fact, it barely even made the news. Maybe it’s because many have already mourned the departure of his greatest legacy: the 60/40 portfolio.

SPONSORED Destiny Wealth Partners: RIA Team of the Year shares keys to success

Discover the award-winning strategies behind Destiny Wealth Partners' client-centric approach.