More and more, companies that switch 401(k) providers move to mutual fund companies, Dow Jones reports.
In fact, of 391 plan sponsors each with $1 million or more in plan assets that changed providers during a two-year period, Stamford, Conn.-based Brightwork Partners found that 26% chose mutual fund companies as their new providers, a recently released showed. That represents a 3% increase over results from 2004.
At the same, time financial planning firms accounted for 4% of the newly chosen providers, compared to 6% in 2005, while banks attracted 14% of the assets, compared to 19% two years ago.
Survey respondents noted that banks demonstrate a lack of institutional commitment and focus. Plan sponsors also chose insurance companies, broker/dealers and third-party administrators, but in the same proportion as years prior.
"Mutual fund companies, because they are increasingly focused on the customer service dimension and because of the decline of the requirement to hold (their) proprietary funds in the plan, are becoming significantly more competitive than they have been," said Merl W. Baker, a Brightwork principal.
Sponsors are looking for providers that will offer better investment advice, enrollment tools and management plans.
"This year, we are looking at people that switched not because they were angry, but because of a better opportunity," said Baker. "That is a huge change from what we used to see."
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.