Market Insight from Fred Barstein

August Opportunity Index Remains Hot

Neither rain nor sleet nor force of Hurricane Charlie/Frances/Ivan can stop the 401kExchange Opportunity Index. August 2004 was the best ever for all markets since we began tracking the Index in 1999 (percentage of plans actively searching or thinking of changing) except for the $1-$10 million market where it was only slightly behind 2003. Overall, the Index is 46% ahead of 2003 YTD (view chart). Based on these numbers, we can expect to see the best selling season in the 401(k) market history.

But the news is not good for everyone. While over 70 providers have exited the market, sold their 401(k) or entire businesses, or outsourced record keeping since 2000, there are many tier 2 providers which, while profitable, continue to fall behind top tier vendors. There’s a continuing flight to safety by Sponsors as record keeping and administration becomes a commodity and fund lineups expand. Why should a Sponsor go out on a limb with a tier 2 provider when they can get most if not all services at similar prices with a top tier provider that has the resources to keep investing in technology and distribution. As Warren Cormier, President of the Boston Research Group recently stated, tier 1 providers compete against each other for tier 2 provider clients.

It’s time to either grow or go for Providers. Look for an active M&A market over the next 18 months and, as an Advisor, don’t get caught on the wrong side of the deal.

View 401kExchange's previous Newsletter (September 1, 2004)

Boston Research Releases 5th Annual DCP Study
This report measures brand image, service quality, loyalty, and key market dynamics through interviews with 1,625 401k plan sponsors with $5 million+ in plan assets. The DCP research is relied on by nearly all top record keepers to track their performance and progress.

August Contributions By Fund Type
The Hewitt 401k Index now tracks participant contributions.

Prospect Pipeline LEADS
Over $82 Million in 401(k) Business Opportunities!

Leads available for the week of August 13th contain immediate opportunities with Plan Sponsor prospects that are either dissatisfied or actively looking with an Advisor for a plan price / value audit! For lead details, contact 877-777-401k ext.3402 or vhenderson@401kExchange.com.

Lead #	Area Code	State	Assets
1	310	CA	$600,000
2	310	CA	$840,000
3	408	CA	$3,000,000
4	712	IA	$400,000
5	312	IL	$5,000,000
6	617	MA	$40,000,000
7	314	MO	$800,000
8	207	NC	$16,000,000
9	704	NC	$750,000
10	704	NC	$175,000
11	609	NJ	$126,000
12	716	NY	$1,000,000
13	419	OH	$300,000
14	360	OH	$4,700,000
15	513	OH	$1,000,000
16	503	OR	$1,700,000
17	610	PA	$300,000
18	814	PA	$1,600,000
19	423	TN	$1,100,000
20	512	TX	$1,800,000
21	360	WA	$500,000
22	304	WV	$892,236

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