Small and Mid-Sized Plans Are the Sweet Spot

Twenty-nine percent say they are likely to switch retirement plan providers within the next year.

While retirement plan providers typically aim to serve large and mega-sized plans, Cogent Reports attests that they would be better off going after small and mid-sized plans, those with $5 million to $100 million in assets. Thirty-nine percent of these plans say they are about to launch a 401(k) plan review, and 29% say they are likely to switch providers within the next year.

Asked why they are likely to switch providers, these sponsors say it is due to fees, investment choices and participant services. Asked what they are looking for in a new provider, they say it is trustworthiness, acting in the best interest of participants and being easy to do business with.

“This year, a number of firms appear to have improved their brand perceptions in the important areas of being easy to do business with, choice and flexibility in investment options and value for the money,” says Sonia Sharigian, product director at Market Strategies-Morpace, which conducted the survey. The top five firms sponsors cite are: Fidelity Investment, Empower Retirement, OneAmerica, Vanguard and Ascensus.

In addition, 11 companies achieved year-over-year improvements in consideration: Charles Schwab, Principal, Prudential, Bank of America Merrill Lynch, ADP, Ameritas, John Hancock, Alliance Benefit Group, MassMutual, Nationwide and BB&T.

“In order to maximize their chances of winning new business, plan providers need to demonstrate an understanding of each plan sponsor’s challenge and tailor their sales efforts to meet the needs of each individual situation,” says Linda York, senior vice president at Market Strategies-Morpace.

The findings are based on an online survey of 1,421 sponsors conducted this past February and March.