Some say that the Defined Contribution/401(k) market is mature and about to experience significant consolidation. There are 45 national record keepers in this deflationary, over-regulated market. There’s limited opportunity for organic growth or major market share shifts. However, though we are starting to see signs, consolidation is slower than predicted. So maybe the DC market is not mature, and record keepers (plus another 500 local record keeping TPAs) are holding on until the industry transforms itself into something entirely different and more lucrative.
DC plans are an opportunity for employees to contribute to their retirement with no financial obligations and limited fiduciary responsibilities by the employer. Like a worksite benefit, rather than an employer-paid one, each participant should be considered to be a client. Sure, the company has to be sold on one record keeper and adviser, but after that there are many clients. If the DC market is morphing into a worksite benefit more similar to non-ERISA, K-12, 403(b) plans without the baggage or multiple record keepers and advisers, then perhaps it does not make sense to bifurcate the market into small, mid-size and large plans or even retail versus professional firms.
