As many as 66,000 401(k) plans might be switching record keepersthis year, with the likelihood of a transfer increasing along withthe size of the plan.

|

That’s according to the annual Retirement Planscape, a CogentReports study from Market Strategies International. The study foundthat 11 percent of 401(k) plan sponsors said they were very likelyto replace their current recordkeeper at some point in the next 12months.

|

And the larger the plan, the more likely there will be a switch,with 13 percent of mid-sized plans, 20 percent of large plans and18 percent of “mega” plans declaring their intention.

|

Read: The 10 biggest 401(k)s

|

So why are they on the hunt for new record keepers? Fees andinvestment options, mostly, although large and mega plans are alsoconcerned with service quality for both sponsors andparticipants.

|

Larger plans are more prone to using retirement specialists,such as plan or employee benefits consultants, whereas smallerplans are more often relying on financial advisors, research thatthey do themselves, and the record keepers they hire.

|

Read: Service providers biased toward their ownmutual funds

|

Among the names being considered by sponsors looking to switch,10 firms emerged as the top candidates being considered.

|

And while most of those top 10 firms are strong across all plansizes, Cogent Reports said, some are weaker in certain segments. Inaddition, there are firms under consideration that didn’t make thetop 10 because their strengths are focused within a certain size ofplan.

|

The top 10 firms being considered are these:

|

1. Fidelity Investments

|

2. Charles Schwab

|

3. Bank of America Merrill Lynch

|

4. Vanguard

|

5. Wells Fargo

|

6. Merrill Lynch/Merrill Edge (this brand is specificallymarketed to small businesses)

|

7. ADP Retirement Services

|

8. Prudential Retirement

|

9. New York Life (New York Life Retirement Plan Servicescontinues to operate under its own brand, although the firm’srecordkeeping business was acquired by John Hancock FinancialServices in December 2014)

|

10. American Funds

|

In addition, within certain size constraints, three other firmswere often cited: “Principal Financial Group is clearly on theradar for small plan sponsors,” Linda York, vice president atCogent Reports, said in a statement. She added, “And amongmid-sized plans, the list of strong contenders for considerationalso includes John Hancock Financial Services and T. RowePrice.”

|

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.