MARKET TREND:
Move toward consolidation of record keeping services

The fact of consolidation of firms that provide record keeping services for 401(k) plans is clearly without dispute. This is an observable market trend that is firmly in place.

The reasons for consolidation are simple. The 401(k) record keeping business is a high capital expense but low profit margin business, and it is becoming increasingly evident that the firms that will survive will tend to be the ones with scale and therefore reasonable market share. Click here to view the "Graveyard Report", a listing of all the record keeping firms that we are aware of that have either exited the business or sold their record keeping businesses to others (the "consolidators", if you will).

Further, click here to view a March, 2003 Pension & Investments article entitled "90% of record keepers likely out of business within 3 years".

As part of our due diligence initiatives, we only work with firms that we have confidence will be survivors in the consolidation trend.

If you have any questions, comments, or interest in speaking with us concerning the advisory services we offer with respect to 401(k) plans, including RFP and vendor selection, please email us, or call John Garven at 888-669-4883, ext. 202.