No, this isn’t a post about the The Clash. It’s about the on-going consolidation in the retirement plan industry of 401(k) providers. According to the Spectrem Group, a consulting firm specializing in the affluent and retirement markets, more than two dozen 401(k) providers have either sold or outsourced the recordkeeping portion of their business in the last five years. It’s for reasons of lack of scale, e.g., Bank of California, or wanting to focus on their core business of investment management, e.g., Franklin Templeton.
Spectrem Group’s recent survey indicated that Provider Consolidation Not A Concern for retirement plan sponsors. How many retirement plan sponsors? A whopping 83% of the sponsors surveyed. That’s a lot of faith to have if you’re a fiduciary who has an obligation to select and monitor service providers. And 6% of the surveyed plan sponsors believe that provider consolidation will have a positive impact on them. And the other 94%?
Picture above, SHOULD I STAY OR SHOULD I GO, by U.Linder Photography.