|
THE MAY 2007
401kExchange Opportunity Index¹
continued to slow down in 2007 as compared to 2006
except in the Large Market ($100 million - $1 Billion).
All other markets were below May 2006 levels and
significantly below historic highs in 2004 and 2005.
YTD all markets except for the Large are down led by the
Mid Market ($10-$100 million) which is off 35.3%.
We
are often asked what could stir sponsors to action. The
answer might lie in the re-invigorated Large Market.
Though larger plan sponsors may not necessarily be
looking to change record keepers, they are concerned
about fees and fee disclosure and, in order to
accurately determine if the fees that they are paying
are reasonable, they need to go to market. In fact, as
reported in a recent article, the most cited reason for
dissatisfaction among sponsors looking to change or
actively searching in 2006 was fees.
While some providers get cold comfort from participating
in a due diligence exercise, it still gives them the
opportunity to meet with a sponsor and demonstrate their
capabilities. And even though the process may have
started because of costs, sponsors are not necessarily
looking for the low cost provider. They tend to compare
value with costs.
As
happens with most trends, larger sponsors tend to lead
the way. Though Micro plans will be the last to move,
Mid Market sponsors are also getting concerned about
their lack of understanding of revenue sharing
arrangements. Smart advisors will focus their initial
value proposition on helping sponsors to fulfill their
fiduciary responsibility. Smart providers will align
themselves with these advisors to be part of the
process.
¹
Percentage of plans that indicate they are currently
searching or thinking of changing providers
|
MICRO MARKET (<$1 MILLION) YTD |
|
YEAR |
2004 |
2005 |
2006 |
2007 |
|
% PLANS IN PLAY |
9.79% |
10.00% |
7.50% |
6.64% |
|
# PLANS IN PLAY |
16,065 |
16,406 |
12,296 |
10,898 |
|
Inc/Dec Prev. Yr (%) |
56.6% |
2.1% |
-25.0% |
-11.4% |
|
SMALL MARKET ($1-$10 MILLION) YTD |
|
YEAR |
2004 |
2005 |
2006 |
2007 |
|
% PLANS IN PLAY |
10.09% |
9.27% |
7.42% |
5.69% |
|
# PLANS IN PLAY |
4,060 |
3,731 |
2,985 |
2,288 |
|
Inc/Dec Prev. Yr (%) |
41.7% |
-8.1% |
-20.0% |
-23.3% |
|
MID MARKET ($10-$100 MILLION) YTD |
|
YEAR |
2004 |
2005 |
2006 |
2007 |
|
% PLANS IN PLAY |
10.04% |
12.76% |
9.44% |
6.10% |
|
# PLANS IN PLAY |
552 |
701 |
519 |
335 |
|
Inc/Dec Prev. Yr (%) |
36.5% |
27.1% |
-26.0% |
-35.3% |
|
LARGE MARKET ($100 MILLION-$1 BILLION) |
|
YEAR |
2004 |
2005 |
2006 |
2007 |
|
% PLANS IN PLAY |
8.14% |
10.88% |
4.15% |
6.90% |
|
# PLANS IN PLAY |
88 |
118 |
45 |
75 |
|
Inc/Dec Prev. Yr (%) |
88.1% |
-28.8% |
-61.8% |
68.3% |
|
TOTAL MARKET (<$100 MILLION) YTD |
|
YEAR |
2004 |
2005 |
2006 |
2007 |
|
ASSETS |
$30,164,068,875 |
$33,563,205,070 |
$25,474,331,053 |
$18,105,241,281 |
|
ASSETS % INCREASE/YR |
40.5% |
11.3% |
-24.1% |
-28.9% |
Return to Newsletter |
 |
