FUTURE TENSE – Capability, Compatibility, Cost Draw Recordkeeping Battlelines

Survey Says

The survey found that most providers currently offer a diverse selection of funds, the ability for participants to check and interact with their balances over the phone, either via live operator or automated voice response.  An increasing number offer access to participant account information over the Internet, a trend likely to accelerate over the next 12 months.

However, all providers did not offer all capabilities to plan sponsors of any size.  Frequently, those “package” deals come with strings attached.  More significantly, the survey suggests that providers are only just beginning to tap into the Internet’s capabilities in providing plan diagnostic information to plan sponsors.

Going Their Own Way

In the past 24 months, the business of recordkeeping has moved from merely providing daily access to participant accounts to estimating what that balance will look like in 30 years – and perhaps evaluating the adequacy of that sum in retirement.

Of the top 10 recordkeepers by number of participants, nine were using a proprietary recordkeeping system.  Overall, about 30% were still using their own software, about the same percentage that used SunGard’s Omniplan/Omniplus.  Trustmark was the next most widely used. 

Currently only about 60% of this group is offering financial advice to participants, either directly or through a partner.  The top 10 by participants included Fidelity, Hewitt, CitiStreet, Vanguard, Merrill Lynch, MetLife, Principal, Northern Trust, PricewaterhouseCoopers (PWC) and Putnam.

Those serving the very largest plans were even more likely to offer advice. Hewitt topped the average participants/plan list, with roughly 30,000 per plan, followed by SunGard, with approximately 21,000.  PWC, Northern Trust and American Express rounded out the top five.  All offered access to investment advice.
 
Looking at the largest number of clients, different leaders emerge.  Aetna’s 29,573 clients leads the list, with Fidelity’s 21,093 ranking second.  Scudder, Citistreet, Nationwide, Merrill, ADP, Principal, Prudential Cigna and Putnam round out the top 10. Only half of this group used their own platform, with SunGard’s Omniplus/Omniplan a clear favorite of the remainder.

Market Leaders

Hewitt was the clear leader in the mega plan market (over 10,000 participants/$1 billion in assets), with nearly twice the number of large participant plans as number two Vanguard – and three times the asset base in this segment. 

However, Vanguard was the leader in the mid-market (1000-5000) participants, barely nipping out Cigna.

In terms of plans, the Principal Group was way out in front in the 500-1000 participant market – no one else was close.  Principal also led in number of plans in the 100-500 participant segment and the sub-100 participant plan segment.  Scudder Kemper was a distant second in the 100 – 500 segment, while Aetna was a close second in the smallest segment.