Robust RK Field Still Offers Choice, Flexibility

June 20, 2002 ( - After years of weaning and winnowing out unprofitable and undercommitted providers, today's recordkeeping field still offers plan sponsors a robust choice of funds, providers and capabilities.

Some are focused on specific niches within the market, others are able to field credible offerings in multiple venues, and still others appear to have morphed in creative ways to accommodate their own strengths and the market’s needs.

And yet that very depth and breadth of offering presents plan sponsors with something of a Hobson’s choice. Not long ago, a plan sponsor, particularly one armed with a good RFP, could eliminate a number of providers by posing one or two key functionality questions that were designed to sort the wheat from the chaff. 

Analysis of the 2002 PLANSPONSOR Recordkeeping Survey reveals a great deal about the state of the industry and its progress. Yet selecting and evaluating a provider, still remains challenging. As the title suggests, finding a fit is perhaps more complicated and daunting than ever.

All for One?

Take the key area of participant and plan sponsor services. Some 90% of the respondents to our annual survey now offer online loan modeling and initiation, transfers and deferral changes, savings calculators and investment education. All offer account balance lookup.  And while only two-thirds offer online withdrawals and distributions, taken in total, 82% of the 75 dominant providers offer these services to ALL plan sponsors – and only 11% charge an additional fee for them.

The picture is only slightly less overwhelming when it comes to plan sponsor services. Some 95% offer plan summary information, while more than 80% offer some level of plan demographic, vesting data, and customized reporting capabilities.  A comparable number support contribution transmissions, and roughly two-thirds already offer account aggregation. More than 80% offer these services to all clients, and fewer than one in ten charge an additional fee.

Slicing and Dicing

Fidelity topped the list of recordkeepers, both in terms of assets ($476 billion) and participants (9,500,000), roughly twice the size on both counts as runner-up CitiStreet ($184 billion in assets and 5,055,422 participants).  Hewitt occupied the number three slot in both rankings, while Merrill Lynch was fifth in both.  Vanguard was fourth in terms of assets, but just seventh in terms of participants, while MetLife, which came in fourth in terms of participants, was sixth in terms of assets.

In terms of clients, Nationwide topped the chart, buoyed by a large number of individual 403(b) accounts, while ING and Principal were not far behind.  Even here, Fidelity was a strong fourth place.

Hewitt’s focus on larger plans gave it the top slot when ranked by average recordkeeping assets per plan ($1.28 billion) and participants per plan (nearly 31,000), dwarfing the competition.  Northern Trust’s nearly $225 million in assets and 9,300 participant average came in next, followed by SunGard.

However, in the lucrative average assets per participant category, Fifth Third has managed to garner plans with an average balance of nearly $60,000. Close behind are JP Morgan/American Century and Pacific Retirement.  Fidelity was fourth, with an average participant balance of about $50,000.