|
 Industry
Insight from Fred Barstein
July 401kExchange Opportunity Index
Continues Slide from Peak in 2005
LOOKING LIKE A
Manhattan skyline, the 2008 401kExchange Opportunity
Index¹ for July 2008 is dominated by the Empire State
Building that was 2005 for the Mid- and Large-Markets
($10-$100 million and $100 million-$1 Billion) and the
former Twin Towers of 2004 and 2005 for the smaller markets
with other years, especially recent ones, looking very small
in comparison. Though all markets are up slightly in July
2008 as compared to July 2007, YTD results are down
significantly. With extreme reluctance to change record
keepers by sponsors also comes grave concern about fees,
transparency, participant preparedness and fiduciary
liability. The problem is that few if any providers are
that much better than their peers to warrant the pain of a
move. The move to experienced advisors, however, is heating
up at a rapid pace because the need is glaring while the
pain to change advisors is minimal.
Advisors are a much more receptive audience for record
keepers. Though moving plans is hard work and time
consuming even for advisors, they are more concerned about
provider consolidation and more interested in having fewer
partners offering greater support, especially around
practice management. Investment Only providers are stepping
up to the plate to help support advisors as changing funds
is relatively painless. Record keepers would be wise to
focus more on an advisor’s book of business than trying to
win RFPs which are getting rarer, especially those that will
ultimately result in a move as smart providers focus more
attention on re-pricing and client retention.
¹
Percentage of plans that indicate they are currently
searching or thinking of changing providers
|
MICRO MARKET (<$1 MILLION) JULY 2008 YTD |
|
YEAR |
2005 |
2006 |
2007 |
2008 |
|
% PLANS IN PLAY |
10.15% |
7.08% |
6.36% |
4.72% |
|
# PLANS IN PLAY |
23,301 |
16,251 |
14,607 |
10,840 |
|
Inc/Dec Prev. Yr (%) |
7.4% |
-30.3% |
-10.1% |
-25.8% |
|
SMALL MARKET ($1-$10 MILLION) JULY 2008 YTD |
|
YEAR |
2005 |
2006 |
2007 |
2008 |
|
% PLANS IN PLAY |
9.55% |
7.34% |
5.35% |
4.21% |
|
# PLANS IN PLAY |
5,381 |
4,134 |
3,013 |
2,370 |
|
Inc/Dec Prev. Yr (%) |
0.9% |
-23.2% |
-27.1% |
-21.3% |
|
MID MARKET ($10-$100 MILLION) JULY 2008 YTD |
|
YEAR |
2005 |
2006 |
2007 |
2008 |
|
% PLANS IN PLAY |
13.27% |
8.00% |
5.78% |
4.38% |
|
# PLANS IN PLAY |
1,021 |
615 |
445 |
337 |
|
Inc/Dec Prev. Yr (%) |
38.4% |
-39.7% |
-27.7% |
-24.3% |
|
LARGE MARKET ($100 MILLION-$1 BILLION) JULY 2008 YTD |
|
YEAR |
2005 |
2006 |
2007 |
2008 |
|
% PLANS IN PLAY |
12.81% |
4.28% |
6.30% |
4.01% |
|
# PLANS IN PLAY |
194 |
65 |
96 |
61 |
|
Inc/Dec Prev. Yr (%) |
33.7% |
-61.9% |
66.3% |
-49.7% |
|
TOTAL MARKET (<$1 BILLION) JULY 2008 YTD |
|
YEAR |
2005 |
2006 |
2007 |
2008 |
|
ASSETS |
$106,336,863,246 |
$51,503,510,594 |
$52,386,350,102 |
$36,416,410,358 |
|
ASSETS % INCREASE/YR |
26.4% |
-51.6% |
1.7% |
-30.5% |
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