401K Providers

401K Providers: 2015 Top 20 Lists


Editor's note: There is a more up-to-date version of this article at 401k Providers: 2016 Top 20 Lists. Thanks!


The good news is that plan sponsors have many choices when selecting a recordkeeper for their defined contribution plans. The challenge for many businesses, especially for small businesses, is that day-to-day running of their businesses leaves little time to review, monitor, and optimize their DC plan. The result is that many plan sponsors lack a comprehensive understanding of who the top 401k providers are. PLANSPONSOR magazine conducts an annual recordkeeping survey profiling top providers. Here is their list of the 2015 top 401k providers and a few of my thoughts.



2015 TOP PROVIDERS (RECORDKEEPERS)

 

By Total Defined Contribution Assets ($MM)
1 Fidelity Investments $1,445,635
2 TIAA-CREF $429,808
3 Empower Retirement $416,313
4 Aon Hewitt $394,058
5 Vanguard $389,402
6 Voya Financial $352,173
7 Prudential Retirement $241,843
8 Wells Fargo $217,500
9 Xerox HR Solutions, LLC $194,398
10 Principal Financial Group $173,267
11 T. Rowe Price $146,439
12 Bank of America Merrill Lynch $134,822
13 John Hancock Retirement Plan Services $126,171
14 Transamerica Retirement Solutions $125,323
15 MassMutual Financial Group $120,810
16 Charles Schwab $115,447
17 Nationwide Financial $96,835
18 Mercer $96,179
19 VALIC $84,706
20 ADP Retirement Services $59,553

 source: 2015 PLANSPONSOR Recordkeeping Survey

By Total Defined Contribution Plans
1 Paychex, Inc. 68,000
2 John Hancock Retirement Plan Services 54,329
3 Principal Financial Group 51,020
4 ADP Retirement Services 47,605
5 Voya Financial 46,595
6 Ascensus 44,579
7 American Funds 40,551
8 Nationwide Financial 38,888
9 MassMutual Financial Group 32,981
10 VALIC 32,693
11 Fidelity Investments 32,181
12 Empower Retirement 32,017
13 AXA 28,926
14 Security Benefit 28,533
15 MetLife Resources 28,216
16 Lincoln Financial Group 26,531
17 TIAA-CREF 24,301
18 Transamerica Retirement Solutions 23,603
19 Plan Administrators, inc. (PAi) 13,768
20 Alliance Benefit Group 12,268

source: 2015 PLANSPONSOR Recordkeeping Survey

Fewer Providers Due to Industry Consolidation

While defined contribution (DC) plans continue to grow in assets, number of plans, and participants, the number of recordkeeping service providers is declining. For example, Empower Retirement was established as a rebrand of Great-West Retirement Services, Putnam Investment's retirement business, and J.P Morgan Retirement Plan Services. John Hancock Retirement Plan Services acquired New York Life Retirement Plan Services. This summer, the Bank of Montreal agreed to sell its US retirement-services business to OneAmerica Financial Partners. Many plan sponsors remain uncertain how this industry consolidation will impact their retirement plan services and pricing. While some are concerned that fewer competitors mean less choice, others predict that the remaining service providers, fewer in number but more dominant in position, will be able to provide more value and deliver better technology to plans and their participants. According to PLANSPONSOR, 20 recordkeepers now account for 87.7% of defined contribution assets—up from less than 75% in 2005.

No One-Size-Fits-All

While choices for selecting a 401k provider remain abundant, plan sponsors are challenged to identify their needs and engage the best service providers to meet those needs. Recordkeeping 401k providers can vary significantly in that some deliver more services while others promise less cost. Case in point, Paychex is the top 401k provider in the country based on number of DC plans. However, Paychex does not make the top 20 list based on assets ($.) How can this be? The reason is that Paychex shines as a provider for start up plans and smaller plans, i.e. plans with smaller assets and/or fewer participants. Like everything in life, there is no one-size-fits-all solution that is best for everyone. It always "depends."

Your Needs Are a Moving Target

Many business owners say that they're not familiar with the variety of 401k provider options because they rely on the rep who sold them their plan. This comes as no surprise because business owners are focused on running their businesses.

Even if your plan is set up perfectly today, your needs will change over time. Plan assets grow and the number of participants change. Therefore, it is a good best practice to review your plan regularly to see if plan design changes can be implemented to improve the plan and make sure that your costs are reasonable. If your plan has changed so dramatically, it could call for a complete change in 401k providers.

We Can Help

The process of reviewing your plan does not have to be difficult or time consuming. Either contact several service providers for a proposal or have a 401(k) advisor initiate and review proposals for you. Runnymede frequently performs complimentary reviews for plan sponsors.  The evaluation includes a Total Cost Analysis (a diagnostic of hard-dollar and soft-dollar fees) and a Fund Scoring Report to benchmark the investment options currently offered to participants.  

Doing so on a regular basis will ensure that you are working with the best 401(k) service providers for your company and its employees.

401(k) checklist

 

When was the last time you reviewed your plan and decided to change service providers? Please share your experiences and thoughts.

Share This Story, Choose Your Platform!

About the Author: Andrew Wang

Andrew Wang

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Runnymede Capital Management, Inc.), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Runnymede Capital Management, Inc. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Runnymede Capital Management, Inc. is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of Runnymede Capital Management, Inc.’s current written disclosure statement discussing our advisory services and fees is available for review upon request.