Who are the top 10 SMB 401(k) recordkeepers in 2017, and how do you compare these providers and pick one that is right for for your small or midsized business?
Every year, PlanSponsor magazine* ranks the top recordkeepers by assets, clients and the market that they serve (small business, mid-sized businesses etc.) This ranking provides a unique view into the 401(k) provider market, helping 401(k) advisors and the companies that sponsor retirement plans understand which vendors are winning marketshare and gaining clients.
If your company is considering switching 401(k) providers, these lists can help narrow down the vendors that you choose to speak with. We’ll talk more about how to run a 401(k) provider selection process below the rankings.
Using the PlanSponsor data, we are defining a top small business 401(k) provider by the number of plans, with under $10 million in assets, that each recordkeeper is servicing. For mid-sized businesses, we are are looking at the data for plans with $10 million to $100 million in assets – once again, using the PlanSponsor data.
It is important to note that, in this post, we are defining a provider as a 401(k) recordkeeper. The recordkeeper is basically like the bookkeeper of the plan. Your company’s employees are probably using the recordkeeper’s website to monitor and modify their investment selections. As the employer handling 401(k) plan’s administration, it is likely that you are logging into the recordkeeper’s site to make employee deferral rate changes (that is, unless you have 401(k) payroll integration, which links your payroll to your recordkeeper). Learn more about what a recordkeeper does here, and learn about the various vendors needed to service a 401(k) plan here.
The top 10 401(k) providers ranking have been stable for the past two years, with only one new provider making it into the top 10 list for defined contribution plans under $10 million in assets, according to PlanSponsor’s annual recordkeeping surveys.*
While Fidelity maintained pole position once again, with over 6,000 companies with $10 million to $100 million in retirement assets served, there were some big moves in the other ranks. Alliance Benefits Group jumped into the number two rank, from not even making the list the previous year. It appears that they added a large number of plans year-over-year, according to PlanSponsor data, and many of these plans must have had between $10 million and $100 million in assets. Their jump moved every other recordkeeper down one slot, except for TIAA and Empower. Empower grew plans managed in this category 18% year-over-year, allowing them to hold steady and push TIAA down two slots.
Obviously, there is a big difference in the recordkeepers who make the top 10 list for small businesses vs. the recordkeepers on the top 10 list for mid-sized businesses. Only four of the recordkeepers are on both lists, Principal, Voya, Empower and MassMutual.
This has implications to a business that is looking to use one of these providers as their recordkeeper. In many instances, the recordkeepers have focused their platforms on a specific sized company, and may not be the right fit for all companies. Managing a $2 million plan is not the same as managing a $20 million plan. A company with a $2 million plan shouldn’t necessarily aspire to work with a provider who ordinally services $20 million plans. For example, a mid-sized provider may have high fixed costs that make them expensive for a smaller plan, but reasonably priced for a larger plan once those fixed costs are amortized over a larger participant or asset base.
An experienced, independent 401(k) advisor can help improve the provider search – bringing forward a list of recommended recordkeepers that are right for that specific company’s needs, then negotiating with those recordkeepers to come up with attractive pricing that works for the company and its employees.
At ForUsAll, when we think about small and mid-sized businesses, we tend to think less about the assets that a company has and more about the employee base. A company with 25 employees is usually pretty different than a company with 250 employees, and a business owner at a successful, 20 person consulting firm thinks about her 401(k) differently than the HR manager at a 400 person manufacturing company. The HR infrastructure, workforce composition, etc. are likely very different – if not unique – at each of those businesses. While the assets at each of these companies is likely correlated with the employee count, using assets is a rather crude way to determine if a plan is associated with a small business or a mid-sized business. (Of course, that is exactly what we’ve done here!)
The ability to think about each company as an individual entity, with specific needs, is where a 401(k) advisor like ForUsAll can help. As an independent 401(k) advisor, ForUsAll is focused on helping small and mid-sized businesses get the most out of their 401(k). Some of the responsibilities of a 401(k) advisor include:
If you are interested in a total do-it-yourself provider search you can just call the top 401(k) providers. You might also want to download our 401(k) provider shopping checklist. This is a worksheet designed to help you better organize your research when comparing 401(k) providers for your company. The worksheet will help you compare providers across the five key elements to a successful 401(k).
Before beginning your search, keep in mind that the defined benefit market has changed considerably in the past several years. Just moving your plan from one vendor to another top 401(k) provider may not be enough to provide your employees with the retirement plan that they deserve. Some recent, important changes in the market to keep in mind are:
The lists of the top small and mid-sized 401(k) providers may not be the right starting point for your 401(k) recordkeeper search. When you are assessing your plan and considering switching providers, consider the how each provider’s’ features and strengths will play across the following aspects of your retirement plan:
If you’d prefer to focus on running your business and want to leave the provider search to an experienced 401(k) advisor let’s get in touch! We believe that we can help you improve your current 401(k) and reduce your fees. Talk to us today.
*The following is our data section of our original report from January 2017, with data on the top 401(k) recordkeepers from 2015 and 2016. *
The top 10 401(k) providers ranking have been stable for the past two years, with only one new provider making it into the top 10 list for defined contribution plans under $10 million in assets, according to PlanSponsor’s annual recordkeeping surveys.*
For mid-sized plans with $10 million to $100 million in assets, the top 401(k) providers list has been even more stable, with most providers staying at the same rank as the previous year, and only one new provider moving into the top 10 401(k) provider ranking.
*The 2015 PlanSponsor survey is here, and here is the 2016 PlanSponsor survey. And if you want to read about ForUsAll in PlanSponsor.
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