ST. LOUIS -- In less than four years, Esco Electronics Corp. has had four different record keepers and investment programs, and undertaken three searches for replacements for them for its 401(k) plan.
Stability is a word that seems to elude this 401(k) plan, which has $115 million in assets. But it is through no fault of Esco. It has been a victim of consolidations and other changes in the 401(k) industry.
"By default, we're well practiced at 401(k) searches," said Cheri Hoeferlin, benefits manager for Esco, which in 1990 was spun off from Emerson Electric Co., also of St. Louis. "But it has been time consuming."
The first of its series of searches and hirings began in 1996. Then William M. Mercer & Co., New York, was Esco's record keeper, while Boatmen's Trust Co., St. Louis, managed all three of the investment choices the 401(k) plan offered participants: a money market fund; a Standard & Poor's 500 index fund; and a guaranteed investment contract fund.
Esco decided to move to daily valuation, inviting Mercer to bid and opening the bidding process to other vendors.
Boatmen's won. So Esco switched its record keeping to Boatmen's. It retained the three Boatmen's funds, while adding four mutual fund managers: a blue-chip stock fund from Fidelity Investments, Boston; an international equities fund from T. Rowe Price Associates Inc., Baltimore; a small-cap fund from Putnam Investments, Boston; and a small-cap fund from Vanguard Group, Malvern, Pa.
In 1997, NationsBank of Charlotte, N.C., acquired Boatmen's, getting out of the record-keeping business and causing Esco to undertake another search for a record keeper. It wound up hiring Bankers Trust Co., New York. In the process, it added seven investment funds from Bankers Trust, retained the four newer mutual funds, and dropped all of the Boatmen's funds.
This year, after Bankers Trust decided to leave the record keeping business, Esco was forced to undertake another search. It hired Vanguard, which also will manage all 12 of the 401(k)s investment choices, including the small-cap fund Vanguard had been managing. The plan dropped all of the Bankers Trust funds and the three other mutual funds.
The plan is in the process of transferring the management to Vanguard and hopes to have the new program ready for participants by May.