Here is a look under the hood of Vanguard’s record-keepingbusiness, and 10 trends plan sponsors and advisors may want to note.

There is no disputing that the massive flows of cash fromactively managed mutual funds over the past five years have beendriven by the Vanguard name.

Related: 10 factors impacting the target-datemarket

All told, Vanguard manages over $4 trillion. Over the past threeyears, nearly $825 billion has flowed into Vanguard funds. Bycomparison, the rest of the mutual fund industry captured $97billion in the same period.

Vanguard’s dominance in the retail investor market hastranslated to growth in its defined contribution record-keepingbusiness.

Related: The 5 industries with the best 401(k)plans

The number of plans with at least $20 million in assets thatVanguard services actually dipped over the past five years. In2016, Vanguard serviced 1,900 plans of at least that size, comparedto 2,000 in 2012.

But when measured by number of participants, the Valley Forge,Pennsylvania-based firm, which is the fourth largest DCrecordkeeper with about $393 billion in assets under management,has seen considerable growth.

According to the 2017 How America Saves report, Vanguard was therecordkeeper on 4.4 million participant accounts in 2016, up from3.4 million in 2012—or about a 30 percent increase over a five-yearperiod.

While Vanguard’s dominance of the target-date fund spacecontinues to expand—it holds more than 30 percent of all TDFassets—the firm’s record-keeping unit is still separated by somedistance from Fidelity, the DC world’s largest service providerwith $1.5 trillion in record-kept assets.

Let's take a look at those trends:

1. By 2021, three quarters of Vanguard participants will besolely invested in automatic investment programs.

At the end of 2016, more than half of Vanguard participants weresolely invested in what the firm calls an “automatic investmentprogram”—a TDF, balanced fund, or a managed account, the threequalified default investment alternative options established underthe Pension Protection Act of 2006.

At the end of 2007, just 17 percent of Vanguard participantswere exclusively invested in a QDIA option. Today, TDFs dominatethe three QDIAs—46 percent of all Vanguard participants areexclusively invested in a TDF, with another 4 percent and 3 percentexclusively invested in a managed account or balanced fund,respectively.

By 2021, Vanguard is predicting that 75 percent of itsparticipants will be solely invested in an automatic investmentprogram.

2. Virtually every sponsor client offers a TDF.

Nine in 10 of the approximately 1,500 plans sponsors that useVanguard’s platform offer a TDF.

And 97 percent of the participants serviced by Vanguard are inplans that offer a TDF. About three quarters of participants use aTDF for at least a portion of their savings strategy, withtwo-thirds of that group invested entirely in a single TDF.

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3. Auto-enrollment is driving trends, but personal choiceaffects TDF market too.

Sponsors’ ability to default participants into TDFs has beenthat market’s greatest catalyst.

But participant choice still factors large in the Vanguarduniverse. Half of Vanguard’s TDF investors choose the funds ontheir own—not through default.

4. Auto-enrollment is negatively impacting deferralrates.

As other 401(k) analysis has indicated, the trend of automaticenrollment, largely a positive phenomena for the country’sretirement landscape, seems to negatively impact deferral rates inthe Vanguard universe.

The average deferral dropped in 2016 to 6.2 percent of salary,from 6.9 percent in 2015. Vanguard’s report says that is directlyattributable to increased adoption of auto-enrollment.

By the end of 2016, 45 percent of Vanguard plans had adoptedauto-enrollment, up from 41 percent in 2015.

The average voluntary participant deferral was 6.3 percent,compared to 6.1 percent when participants were automaticallyenrolled in plans.

5. Avg. contribution rate is near 11% when accounting foremployer match.

When factoring for employer matches, the average contributionrate held steady at about 10.9 percent.

Almost one in five participants contributed more than 10 percenton their own, and 10 percent of participants contributed $18,000,or the statutory limit.

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6. These have been good years for 401(k) investors.

It’s been a good time to be a 401(k) investor over the past fiveyears, thanks to a long bull market in equities. Stocks rose 10percent in 2016.

The average account balance was nearly $96,500. The averagecontribution was allocated mostly to equities—about 75 percent.

The average total return rate was 8.3 percent in 2016. The onlynegative year of the past five was 2015, when the average totalreturn was -0.4 percent. Average total return was 20.4 percent in2013; 12.4 percent in 2012; and 7 percent in 2014.

7. The majority of plans allow immediate participation.

In 2016, 67 percent of plans allowed participants immediateeligibility to contribute to plans, and 54 percent of employerplans made matches immediately available.

Nearly half of employers had no vesting period requirement foremployer matches.

8. Match design can vary.

Vanguard administered more than 200 matching formulas among itssponsor clients.

Most employers are pitching in: 94 percent of plans offered amatching contribution only, a non-matching contribution only, or acombination of the two. The favored form was a matchingcontribution only, with 42 percent of plans applying that form.

Most plans—70 percent—use a single-tier match formula, like$0.50 per dollar of 6 percent of pay.

Another 22 percent use a multi-tier formula, like a dollar matchon the first 3 percent of pay, and then $0.50 per dollar on thenext 2 percent of pay.

About one in five plans offered a $0.50 per dollar match on thefirst 6 percent of pay, the most common match structure.

Nearly one in five plans contributes more than 6 percent ofpay.

The average match among plans was 4.1 percent, which has heldsteady over the past five years.

9. A 3% default rate dominates.

The most common default contribution rate is 3 percent, with 44percent of plans using that rate.

Over the past five years, more plans are defaulting at higherrates:

• 15 percent of plans defaulted at 4 percent in 2016, compared to12 percent in 2012.

• 13 percent of plans defaulted 5 percent in 2016, compared to 8percent in 2012.

• 20 percent of plans defaulted at 6 percent or more in 2016,compared to just 12 percent in 2012.

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10. Default deferrals are increasing.

When plans do incorporate an automatic increase along withautomatic enrollment, 65 percent of plans apply a 1 percent annualincrease.

Only 9 percent of plans use automatic enrollment without anauto-increase feature.