SAN FRANCISCO - Kenny Lee Adams knows firsthand the innate truth of the adage: Anything worthwhile is worth waiting for.
In 1994, Ms. Adams had "a vision" of creating a catalog that would provide concise, accurate and up-to-date information on 401(k) providers nationwide. In February, that vision finally came to fruition; the "(k)form Catalog" arrived.
"I basically had the idea that a catalog of this type would allow plan sponsors to move away from RFPs," said Ms. Adams, owner of (k)la Formula, San Francisco. "The catalog is designed for companies with 25 to 5,000 employees that are looking to change vendors for an existing 401(k) plan or implement a new one."
The catalog is approximately 300 pages long and costs $599.
Gathering the data for her catalog became a far greater task than Ms. Adams initially had imagined.
"I thought that this would take me a quarter (of a year) to complete," she said. "But many vendors don't like to give information freely. In the first quarter, I had 13 vendors responding. By the second quarter that number was 30, and by the third quarter there were about 40. Then my system crashed three times. So we weren't producing anything till the fourth quarter."
Her background as a commercial lender for California-based banks proved beneficial in Ms. Adams' new role compiling the required information for the catalog; her tenure in the banking industry first exposed her to the growing interest in 401(k)s. Over the years, she began to recognize the gap between the plan sponsors' need for defined contribution information and the lack of reliable 401(k) data.
Ms. Adams said the vendors listed in her catalog serve more than 50% of the country's 401(k) plans. To qualify for inclusion in the catalog, a vendor must:
Have a national presence in the market;
Demonstrate financial stability;
Show depth and breadth in proprietary and alliance investments;
Provide thorough financial planning modules;
Have legal compliance capabilities; and
Display a reasonable level of technological capabilities in daily record-keeping and telephone inquiry systems.
While she believes all of the information included in her catalog is of some value to subscribers, Ms. Adams said the most valuable information offered by the "(k)form Catalog" is the reference to legal issues.
"Some large companies, such as those in the Silicon Valley, were not aware of all their legal responsibilities in this area," she said. "We make specific referrals to the Department of Labor codes so that plan sponsors know exactly what their legal requirements are."
Although some 401(k) vendors "do a good job providing information," others are less successful and that has helped create a need for the catalog, said Adams said. "No two vendors operate exactly the same way.
"That was one of the things that made compiling this information so complex and sometimes frustrating. When a sponsor is choosing a 401(k) vendor, there are numerous factors that come into play and each sponsor has to evaluate what works best for them."
Selection criteria include compliance, cost, experience and investment performance.
Ms. Adams believes the expansion of 401(k) plans shows no sign of diminishing.
"I really can't see any slowdown in their growth," she said. "And as that continues, a sponsor has a few different options when they move to 401(k)s. They can call their local broker or their brother-in-law or just go through the Yellow Pages, calling up people like Fidelity and saying 'I want a 401(k) plan.' Or they can contact a consultant and go that route."
But that's not the best way to choose a 401(k) provider, Ms. Adams said. "They now have the option of buying our catalog. Consultant fees can run into several thousand dollars. Most companies can't afford that. One client told me he became so frustrated and confused he put all the vendors he was considering up on his wall and threw a dart."
