Vanguard, a powerhouse in investment management, announced Wednesday that it will offer a bundled 401(k) plan service for small companies. The service will launch in fourth quarter and is designed for 401(k) and profit-sharing plans with assets below $20 million.
The firm says the new option "combines Vanguard's low-cost investment options and indexing expertise with the small-plans recordkeeping expertise of Ascensus, a leading recordkeeper and administrator of retirement plans."
The retirement plan service will include funds, recordkeeping, call center services, compliance testing, participant education, and optional services such as participant advice, self-directed brokerage, and trustee services. The firm is touting "all-in" plan costs — total investment and recordkeeping costs — anticipated to be among the lowest in the industry.
"Vanguard believes that small businesses should be able to offer high-quality, cost-effective retirement plans to help their employees save efficiently for their futures," said Kathy Fuertes, head of Vanguard's Retirement Plan Services for small business. "By working with Ascensus, we have developed a streamlined way for these companies and their plan participants to easily access Vanguard's low-cost funds and a range of investment and retirement plan services."
The service will be offered directly to plan sponsors as well as to fee-only advisors who serve sponsors and may be interested in a bundled approach.
Vanguard received the top ranking for overall satisfaction as well as satisfaction with investment performance and value for cost from plan sponsors in Boston Research Group's 2010 Plan Sponsor Satisfaction and Loyalty Study. Ascensus was ranked No. 1 in favorable impression of micro-plan providers in a Cogent survey published in June 2011.
"We are extremely pleased to be able to team with Vanguard to create this bundled retirement plan solution, which we believe will bring significant value to small businesses and their employees," said Bob Guillocheau, president of Ascensus.