Recordkeeper Market Caters to All Plan Sizes, but Differently
The 2018 PLANSPONSOR Recordkeeping Survey has found smaller plans tend to align with adviser-centric recordkeepers or those supplying core business services—e.g., payroll—while larger plans migrate toward providers offering proprietary, and customizable, platforms.
The 401(k) plan is the most common institutional retirement savings vehicle and now accounts for more than 60% of all defined contribution (DC) plans, participants and assets. But the market is far from uniform.
Over 90% of 401(k) plans have less than $10 million in total plan assets, yet these plans account for only 20% of total 401(k) participants and less than 15% of the total assets. Stated differently, the 700 largest plans—accounting for 0.1% of all plans—control 50% of all assets and over one-third (36%) of all participants.
The 2018 PLANSPONSOR Recordkeeping Survey has found the industry has evolved to cater to the unique needs of these two distinct markets, with smaller plans commonly sold or serviced through intermediaries and larger plans more apt to be sold directly. Recordkeepers have somewhat mirrored this trend, resulting in two somewhat separate and distinct competitive landscapes. Smaller plans tend to align with adviser-centric businesses or those supplying core business services—e.g., payroll—while larger plans migrate toward providers offering proprietary, and customizable, retirement plan platforms.
According to the survey, the top five recordkeepers by total 401(k) assets are Fidelity Investments, The Vanguard Group, Empower Retirement, Alight Solutions and Voya Financial. However, when looking at the top recordkeepers by 401(k) plans with less than $10 million in assets, they are Paychex Inc., American Funds, John Hancock Retirement Plan Services, ADP Retirement Services and Ascensus. The top recordkeepers by 401(k) plans with greater than $200 million in assets are Fidelity, Vanugard, Empower, Wells Fargo and Charles Schwab.
Still, through these different recordkeepers, even the smallest plans can offer participants competitively priced investment options, managed accounts, mobile apps and comprehensive financial wellness education.
The 2018 PLANSPONSOR National Conference covered current trends and best practices for defined benefit (DB) and defined contribution (DC) retirement plans, while discussing what lies ahead in retirement plan design, participant engagement and education, and investment options and solutions, as well as, of course, legislative and regulatory updates. In addition, plan sponsor peers discussed practical, creative solutions for retirement plans and participants. Below is our team coverage of conference discussions.
If you missed the conference or want to learn more, consider attending one of our Best of PSNC 2018 events in Chicago, New York, Boston, San Francisco, or Houston in November.
Spending in Retirement and Financial Shocks – Fact and Fiction
Understanding the opportunities associated with 3(21) and 3(38) fiduciary services—and the key differences between them—can help ensure the best use of the retirement plan committee’s time and resources. https://www.plansponsor.com/psnc-2018-fiduciary-services-support/
One important purpose of offering more holistic benefits and education that link health and wealth concerns for employees is that it “prevents the 401(k) plan from being treated like a checkbook.” https://www.plansponsor.com/psnc-2018-health-meets-wealth/
Benchmarking Retirement Readiness Reviewing a participant’s financial health involves more than just deploying the latest retirement readiness tools. https://www.plansponsor.com/psnc-2018-benchmarking-retirement-readiness/