19th annual survey results emphasize growing need for more personalized retirement solutions
BOSTON, MA – MARCH 4, 2025 – NEPC, LLC, one of the industry’s largest investment consulting firms, today published the 19th annual edition of its Defined Contribution (DC) Plan Trends and Fee Survey, which examines emerging investment trends, including the shift toward passive investments and the increasing need for managed accounts to offer more personalized retirement solutions.
Potential in managed accounts
While over the last 20 years, NEPC has seen an increase in DC plans offering managed accounts, that trend has stagnated in the past 3-5 years – even starting to decline in 2025. This year’s survey found that nearly half of respondents (46%) offer managed accounts, though only 9% of participants are utilizing them.
The softening in managed accounts adoption highlights the need for a transformation in the business model as plan sponsors increasingly recognize that the current model, prevalent in many DC plans, is imbalanced, with providers reaping greater benefits than participants.
“We believe managed account providers can and do construct efficient investment portfolios, but plan providers, as fiduciaries, should push for improved outcomes for their plan participants through negotiating lower fees and seeking to better align the interests of the managed account providers with those of participants,” according to Mikaylee O’Connor, Principal, Head of Defined Contribution Solutions.
“A subscription-based model could align business incentives more closely with improved participant outcomes. By implementing a lower base fee for less engaged participants, providers can offer an entry-level option, while more engaged participants could access expanded investment options through tiered subscription offerings. This approach allows for flexibility in costs and features, catering to diverse participant needs and engagement levels.”
Growing appetite for passive
This year’s survey results also reveal that Target Date Funds (TDFs) have maintained their presence as a default retirement investment vehicle and continue to shrink the core menu, with 97% of survey respondents offering them, totaling $161 billion in TDF assets.
Over the last five years, there has been a significant shift in appetite for passive TDFs over active. This year’s survey found that 35% of survey respondents offer active TDFs, down 32% from 2020, when 67% of respondents offered active TDFs.
In comparison, most plans today (54%) offer passive TDFs, as assets in passive TDFs continue to annually outpace active. Only 11% of respondents offer a blend of both active and passive.
TDFs continue to be especially attractive for participants under the age of 35, as 86% of TDF investors are 100% invested in TDFs, in comparison to participants over the age of 65, where only 58% are 100% invested.
“Analyzing this year’s survey results through a long-term lens, we are excited by the ample opportunity for industry innovation, personalization, and increased accessibility in the defined contribution marketplace, especially across areas like alternative investments, managed accounts, TDFs and retirement income solutions,” added O’Connor.
About NEPC’s 19th Annual Defined Contribution (DC) Plan Trends and Fee Survey
The survey explores current investment trends, features, and innovations in key sectors, as well as how these plans have developed over time. Respondents to the 2024 survey include 137 clients representing $408 billion in aggregate assets and 3.2 million plan participants.
NEPC’s Defined Contribution (DC) Practice team will discuss the survey’s findings during a webinar on March 6, 2025. Those interested in hearing how NEPC is advising plans can register for the webinar here.
The 19th Annual Defined Contribution (DC) Plan Trends and Fee Survey results can be downloaded below:
About NEPC, LLC
NEPC, LLC is a leading investment consultant, private wealth advisor, and OCIO provider, serving over 400 retainer clients and $1.7 trillion in total assets. Combining a proprietary investment team dedicated to the long-term challenges facing investors with our client-centric model, NEPC builds forward-looking investment portfolios for institutional investors, ultra-high-net-worth individuals, and families. To learn more visit nepc.com.
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