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 Industry
Insight from Fred Barstein
Top Reasons for Dissatisfaction Among
Sponsors in Motion -
2010 Mid Year Report
In a further sign of both
stabilization and commoditization, 401(k) plan sponsors
who were thinking of changing or actively searching for
a new record keeper kept their focus on
fees* (see
chart below).
With the market improving, fewer sponsors were
likely to change and they were less concerned about fund
performance, education, and investment options.
Customer service was stable while plan
administration and record keeping dissatisfaction rose
slightly, though they remain the least cited reason.
The notion of “grow or go” for record
keepers applies not just to acquisitions.
Providers that focused on one service model in one
market were rewarded in the early part of this decade, but
they are now feeling the effects.
In a commoditizing market with fewer plans changing
record keepers, those providers that can effectively service
different size plans with various types of retirement or
even benefit services like payroll are better positioned.
Without losing focus on their core markets, record
keepers need to leverage the relationships they have built
with advisors and TPAs, plus internal strengths, including
capital, as a foundation to move into other markets.
Though everyone predicts the dire impact of 408(b)(2)
on advisors, small market insurance companies are even more
vulnerable.
While some savvy and experienced DC advisors have been
cleaning up their overpriced plans, most if not all
providers with large books of business do not have that
luxury leaving themselves vulnerable to these same savvy
advisors, as well as open architecture record keeping TPA’s.
Though not as exciting when lots of plans were
changing record keepers, this more mature market is more
interesting to watch as the really smart and long term
thinking providers with both financial and home-grown
intellectual capital will begin to pull away from the
thinning and ever increasing vulnerable herd.
*Based on surveys by
401kExchange
in the first half of 2010
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