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 Industry
Insight from Fred Barstein
2008 Mid-Year Ratings of Micro Market Providers
(Editor's Note: To avoid confusion we have relabeled
“Fund Manager” to “Investment Services” which more
accurately reflects the role of the provider in this
category. While the record keeper makes the investment
choices available, they rarely manage all of the funds. The
ratings in this category reflect investment choices,
educational and enrollment services, fees and customer
service related to investments as well as the performance of
the funds. Though the record keeper may not manage the
money or even select the funds, sponsors still hold them
somewhat responsible for the performance of the investments
selected.)
AS
WITH ALL other markets, satisfaction among Micro-Market
sponsors (<$1 million) dropped by 17% for investment
services and 14% for record keeping and administrative
services as compared to the end of year 2007 results. With
all markets dropping at a very similar rate, the most likely
reason is the decline of the stock market. With more open
investment platforms and fewer proprietary fund
requirements, providers might complain that the market dip
is not within their control and they should not be blamed.
Though not their fault, sponsors still hold providers
responsible for results. After all, 401(k) plans were not
created to provide fancy websites or statements – they are
supposed to help participants accumulate enough assets to
retire which they clearly failed to do in the first half of
2008.
Wachovia
topped all providers for investment related services
followed by Securian, NY Life and Ascensus; Baden
captured the top spot for record keeping and administrative
services by a wide margin followed by ExpertPlan and
Securian. Ascensus retained its top 10 spot for investment
services as did John Hancock, CUNA Mutual and
American Funds while Nicholas Hicks and American
Funds did the same for their record keeping and
administrative services. High fees and expenses will remain
an issue in the micro market as long as sponsors refuse to
pay a significant portion of the costs. Infrastructural
services will continue to improve leveraging technology and
processes developed by larger market plans but customer
service and plan design will remain an issue other than
plans serviced by local TPAs.
|
Investment Services 2008 - Mid Year |
# of |
% Rated |
2007 |
|
Surveys |
4 or 5 |
Ranking |
|
1 |
Wachovia Retirement Services |
57 |
54.39% |
|
|
2 |
Securian |
81 |
53.09% |
9 |
|
3 |
New York Life Investment Management |
36 |
52.78% |
|
|
4 |
Ascensus |
74 |
52.70% |
8 |
|
5 |
Principal Financial Group |
801 |
50.94% |
|
|
6 |
Charles Schwab & Co., Inc. |
151 |
50.33% |
|
|
7 |
John Hancock |
1,098 |
50.27% |
6 |
|
8 |
CUNA Mutual Life |
20 |
50.00% |
3 |
|
8 |
Alliance Benefit Group |
24 |
50.00% |
|
|
10 |
American Funds |
439 |
49.89% |
2 |
|
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Market Total |
9,670 |
46.83% |
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Record Keeping & Administrative Services 2008 - Mid
Year |
# of |
% Rated |
2007 |
|
Surveys |
4 or 5 |
Ranking |
|
1 |
Baden Retirement Plan Services |
25 |
76.00% |
|
|
2 |
ExpertPlan, Inc. |
20 |
65.00% |
|
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3 |
Securian |
70 |
58.57% |
4 |
|
4 |
Fidelity American Life |
26 |
57.69% |
|
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5 |
Alliance Benefit Group |
53 |
56.60% |
|
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6 |
Nicholas Hicks Inc |
39 |
56.41% |
6 |
|
7 |
American Funds |
146 |
56.16% |
1 |
|
8 |
Wachovia Retirement Services |
25 |
56.00% |
|
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9 |
T Rowe Price |
27 |
55.56% |
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10 |
CUNA Mutual Life |
20 |
55.00% |
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10 |
Prudential Retirement |
40 |
55.00% |
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Market Total |
9,575 |
52.79% |
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