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 Industry
Insight from Fred Barstein
March 401kExchange Opportunity Index
If the
March 2010 401kExchange
Opportunity Indices¹ are
the new norm for record keepers, sales will fall very
short of goal in 2010 with an average change rate
hovering below 3%.
On the other hand, plans
continue to have a robust interest in changing advisors
at a solid rate of almost 11%, in line with 2009
numbers. Sponsor interest in changing funds is up 40% in
March at 9.22% compared to 6.6% in 2009.
Over 82% of plans with
under $100 million use an advisor, up from 78% in March
2009, and almost 10% of plans without an advisor are
thinking of adding one.
So it’s good to be an
advisor, especially one of the Elite 5,000 who have more
than 15 plans and and $30 million under management, or an IO
(Investment Only) provider with good traction.
Despite
the weak outlook for record keepers, few if any we speak
with predicted less than 3% growth in 2010. Buoyed or perhaps lulled by
market gains, most providers are not prepared for the new
world.
Even those with large books of
business are concerned about “feeding the beast” and most
are stuck in their existing markets and models.
With a glut of manufacturing
capacity and a deflationary trend fueled by new regulations,
lawsuits, and continued government scrutiny, coupled with
savvy advisors and consultants pushing costs lower, record
keepers must innovate or consolidate.
In a commoditized market,
execution becomes crucial with a focus of driving towards
ever increasing efficiency, which is especially difficult
for most firms whose core competency is not record keeping
or data processing like the payroll companies.
Please remember to complete the
DCP
Advisor survey
so that providers and broker dealers can know which
platforms are best serving DC advisors. We
particularly need advisors that work with: CPI, Great West,
Standard, Securian, MassMutual, Prudential, NY Life,
OneAmerica & Lincoln. Along with valuable services
from 401kExchange, advisors will get instant access to the
2009 DCP Advisor Study.
¹ Percentage of plans that indicate they are currently
searching or thinking of changing record keepers, funds or
advisors
|
MICRO MARKET (<$1 MILLION) YTD |
|
YEAR |
2007 |
2008 |
2009 |
2010 |
|
% PLANS IN PLAY |
7.03% |
4.56% |
2.78% |
3.06% |
|
# PLANS IN PLAY |
6,922 |
4,490 |
2,737 |
3,011 |
|
Inc/Dec Prev. Yr (%) |
-10.90% |
-35.10% |
-39.00% |
10.00% |
|
SMALL MARKET ($1-$10 MILLION) YTD |
|
YEAR |
2007 |
2008 |
2009 |
2010 |
|
% PLANS IN PLAY |
5.99% |
3.89% |
2.41% |
2.23% |
|
# PLANS IN PLAY |
1,446 |
939 |
582 |
538 |
|
Inc/Dec Prev. Yr (%) |
-22.70% |
-35.10% |
-38.00% |
-7.60% |
|
MID MARKET ($10-$100 MILLION) YTD |
|
YEAR |
2007 |
2008 |
2009 |
2010 |
|
% PLANS IN PLAY |
5.62% |
4.04% |
2.31% |
1.69% |
|
# PLANS IN PLAY |
185 |
133 |
76 |
56 |
|
Inc/Dec Prev. Yr (%) |
-43.40% |
-28.20% |
-42.80% |
-26.90% |
|
LARGE MARKET ($100 MILLION - $1 BILLION) YTD |
|
YEAR |
2007 |
2008 |
2009 |
2010 |
|
% PLANS IN PLAY |
5.84% |
1.56% |
2.19% |
2.50% |
|
# PLANS IN PLAY |
38 |
10 |
14 |
16 |
|
Inc/Dec Prev. Yr (%) |
68.30% |
-73.30% |
40.10% |
14.20% |
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