|
 Industry
Insight from Fred Barstein
Opportunity Index Continues Slide in February
WITH ALL THE
bad news on Wall Street, it would have been a welcomed
relief for record keepers if plan sponsors had a growing
appetite to change vendors. Unfortunately the 401kExchange
Opportunity Index¹ continued to decline in February. All
markets are at their lowest level YTD since 2000, and they
all declined significantly over last year which was nothing
to write home about. The market for plan movement peaked in
2005 and has lost steam ever since.
With
declining account balances, fewer plans switching record
keepers and the credit crunch hitting the parent companies
of some major providers, look for consolidation to heat up.
CitiStreet is in play but some obvious buyers may back off
because of the weakening of their financial position. Look
for some other providers, large and small, to be put up for
sale soon as some companies not hit by the credit crunch may
heed Baron Phillipe Rothschild’s advice: “When there is
blood on the street, buy property.” On the other hand, more
and more plan sponsors are willing to meet knowledgeable
advisors that can add value especially in the wake of the US
Supreme Court’s LaRue decision. Though advisors get timid
about calling clients during a down market, they should be
that much more aggressive in calling prospects.
¹ Percentage
of plans that indicate they are currently searching or
thinking of changing providers
|
MICRO MARKET (<$1 MILLION) YTD |
|
YEAR |
2005 |
2006 |
2007 |
2008 |
|
% PLANS IN PLAY |
9.82% |
8.07% |
6.68% |
4.92% |
|
# PLANS IN PLAY |
6,440 |
5,297 |
4,384 |
3,228 |
|
Inc/Dec Prev. Yr (%) |
0.6% |
-17.7% |
-17.2% |
-26.4% |
|
SMALL MARKET ($1-$10 MILLION) YTD |
|
YEAR |
2005 |
2006 |
2007 |
2008 |
|
% PLANS IN PLAY |
9.72% |
7.76% |
5.92% |
3.94% |
|
# PLANS IN PLAY |
1,565 |
1,248 |
952 |
633 |
|
Inc/Dec Prev. Yr (%) |
8.5% |
-20.2% |
-23.7% |
-33.5% |
|
MID MARKET ($10-$100 MILLION) YTD |
|
YEAR |
2005 |
2006 |
2007 |
2008 |
|
% PLANS IN PLAY |
14.29% |
11.33% |
4.88% |
3.60% |
|
# PLANS IN PLAY |
314 |
249 |
107 |
79 |
|
Inc/Dec Prev. Yr (%) |
24.8% |
-20.7% |
-56.9% |
-26.3% |
|
TOTAL MARKET (<$100 MILLION) YTD |
|
YEAR |
2005 |
2006 |
2007 |
2008 |
|
ASSETS |
$14,536,479,598 |
$11,594,292,915 |
$6,589,763,394 |
$4,672,058,186 |
|
ASSETS % INCREASE/YR |
16.8% |
-20.2% |
-43.2% |
-29.1% |
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