The survey by Brightwork Partners, a retirement services consultant, found that mutual-fund companies’ market share increased to 26% from 23% two years ago among firms with plans of more than $1 million that have moved providers in the last 24 months, according to a Wall Street Journal report. Financial planning firms saw their share drop to 4% from 6%, the study found.
Banks experienced the biggest decline: they drew 14% of 401(k) sponsors that changed providers, down from 19% two years ago, the Journal reported. The market share held by other providers, including insurance companies, broker dealers and third-party administrators, remained relatively steady.
While 401(k) plan sponsors previously changed providers based on dissatisfaction with service or management of the plan, they are now switching to companies that they believe can provide better investment advice, tools to increase participation rates and participant deferral rates, as well as services to help them better manage the plan overall, Brightwork reported.
Brightwork estimates that about 61,000 corporate defined-contribution plans – almost all of which are 401(k)s and represent about $206 billion in assets – will change providers this year.
More information about the contents of the study is here.