Advisors Can Find Opportunity in 401(k)s, Fidelity Says

Citing recent internal and external research, Fidelity Investments says financial advisers can boost their 401(k) business despite the tough market environment.

About 29,000 companies that sponsor 401(k) plans with $50 million or less in assets under management are expected to change advisers soon, according to the 2009 annual “Marketplace Update Report,” issued by the Society of Professional Asset-Managers and Record Keepers (SPARK). Also, 75% of workplace-based retirement plans under $50 million use a financial advisor, up from 52% in 2003. Taken together, the numbers suggest that financial advisers have compelling opportunities to boost their 401(k) business, Fidelity says.

Fidelity suggests four ways in which advisers can do that: articulate their value proposition to plan sponsors, evaluate existing 401(k) plans to ensure they are competitively priced, offer fee and service benchmarking to address gaps in service, and provide strategies to hone the design of 401 (k) plans and educate employees. 

“This presents an opportunity [for advisors] to diversify their practices,” said Stephen Austin, Fidelity spokesman.