Goldman Sachs remains ``bullish'' on the U.S. asset management industry in its annual report on the state of the investment business released today, but predicts dire straits for all but the top tier of defined contribution plan vendors.
Of the 50 or 60 major players vying now for DC plan assets, all but the top 10 or 15 bundled vendors will likely drop out within two to five years, said Milton Berlinski, managing director of the financial institutions group at a press conference.
Mr. Berlinski said the shakeout will occur primarily because of the tremendous cost of providing plan services and the huge scale companies must achieve to cover costs. In the end, he predicted 20% of the vendors will control 80% of the 401(k) assets.
Goldman officials noted that while money managers are now in the '`golden era'' and making money ``hand-over-fist,'' they will have to become more retail in nature and should focus on distribution, branding and scale.