|
 Industry
Insight from Fred Barstein
August 2009 401kExchange Opportunity
Index Robust for Advisors and Asset Managers
Continuing the downward trend for
record keeper change, the August 2009
401kExchange Opportunity
Index¹ was below 3% for
all markets and at historical lows YTD.
On the other hand,
opportunities for advisors are booming at the highest level
for the year with 11.46% of advised plans looking for a new
advisor.
Over 81% of plans with under
$100 million are using an advisor, which is close to annual
highs and 4% above August 2008.
Of those plans not using an
advisor, 14.51% are thinking of adding one.
This
is by far the most we have seen since the tracking began
this year.
The opportunity for asset
managers remains good with 5.57% of plans looking to add or
change funds.
Clearly, the 401(k) and defined
contribution markets are going through a monumental shift.
Plan sponsors are viewing
their record keeper or platform as a utility with little
reason or incentive to change unless the service or
technology deteriorates significantly.
Because the percentage of
plans with inexperienced blind squirrel advisors is close to
80% (especially with plans under $10 million), the
opportunities for experienced retirement advisors are
robust.
In addition,, sponsors are
recognizing that advisors, not platforms, make the
difference.
Beyond limiting work,
liability, and costs for sponsors, advisors are being tasked
with helping participants to be more successful with their
corporate retirement plan which should result in higher
income replacement.
While investments certainly
play a key role and are clearly more of a factor than the
platforms, it is the advisor who sponsors rightly believe
can make the difference.
And rather than spend time
changing out a record keeper that even if not great, is
doing well, successful advisors are focused on more
important matters that can move the needle for the
participants.
¹
Percentage of plans that indicate they are currently
searching or thinking of changing providers
|
MICRO MARKET (<$1 MILLION) YTD
|
|
YEAR
|
2006
|
2007
|
2008
|
2009
|
|
% PLANS IN PLAY
|
7.07%
|
6.22%
|
4.61%
|
2.64%
|
|
# PLANS IN PLAY
|
18,559
|
16,322
|
12,089
|
6,921
|
|
Inc/Dec Prev. Yr (%)
|
-30.4%
|
-12.1%
|
-25.9%
|
-42.7%
|
|
SMALL MARKET ($1-$10 MILLION) YTD
|
|
YEAR
|
2006
|
2007
|
2008
|
2009
|
|
% PLANS IN PLAY
|
7.24%
|
5.27%
|
4.23%
|
2.34%
|
|
# PLANS IN PLAY
|
4,661
|
3,393
|
2,725
|
1,509
|
|
Inc/Dec Prev. Yr (%)
|
-24.9%
|
-27.2%
|
-19.7%
|
-44.6%
|
|
MID MARKET ($10-$100 MILLION) YTD
|
|
YEAR
|
2006
|
2007
|
2008
|
2009
|
|
% PLANS IN PLAY
|
7.45%
|
5.68%
|
4.19%
|
2.38%
|
|
# PLANS IN PLAY
|
655
|
499
|
368
|
209
|
|
Inc/Dec Prev. Yr (%)
|
-42.5%
|
-23.8%
|
-26.2%
|
-43.2%
|
|
LARGE MARKET ($100 MILLION-$1 BILLION)
|
|
YEAR
|
2006
|
2007
|
2008
|
2009
|
|
% PLANS IN PLAY
|
4.18%
|
5.54%
|
3.79%
|
1.72%
|
|
# PLANS IN PLAY
|
72
|
96
|
66
|
30
|
|
Inc/Dec Prev. Yr (%)
|
-66.3%
|
32.7%
|
-31.6%
|
-54.5%
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