SAN DIEGO -- The Idea Exchange -- the Profit Sharing/401(k) Council of America's annual conference -- began with Dave's Top 10 Tips for the Year 2000 and highlighted dinner with the sharks.
The Dave here was not Letterman but David Hildebrandt, partner in the Washington law firm of Dow Lohnes & Albertson and, as one moderator quipped, the sharks in question were not of the legal but of the Sea World variety. Once again the Profit Sharing/401(k) Council set out to show that pension folks also want to have fun.
"The Profit Sharing/401(k) Council is like no other group. We have a family feeling here," said David Wray, PSCA president, who dusted off his guitar to lead the group in a sing-along at one of the event's cocktail parties.
That is not to say that the plan sponsors and service providers who attended the four-day event spent their time in Southern California surfing.
For example, Dave's top 10, while sprinkled with humorous titles such as "No Good Deed Goes Unpunished," included somber urgings that plan sponsors network with their peers to ascertain what the other prudent people in the industry are doing, comparison- and bargain- shop for plan services, and watch what they tell plan participants so they don't run afoul of federal law.
"Plan sponsors must still play by the rules," Mr. Hildebrandt said. "Well-meaning representations by plan sponsors can inadvertently result in promises by employers for which employers could be liable."
And Edmond F. Ryan, senior vice president of retirement services at MassMutual Life Insurance Co., Springfield, Mass., sobered the audience with his talk on "The Coming Consumer Revolution in 401(k) Plans and What You Should Know About It."
The "revolutionaries" are the plan sponsors and participants. They are not organizing another Boston Tea Party, but beginning to acknowledge their increasing power in a mature 401(k) market, he said. Plan sponsors are taking up their muskets because a mature market breeds competition, Mr. Ryan said.
"In a mature market, power swings to the buyer," he explained.
Participants are rising up because they are recognizing that they pay the bills and because they are becoming better consumers, Mr. Ryan said.
The characteristics of a mature market are price pressure, emphasis among service providers on retaining customers and market share, rapid product development and enhancement and consumer branding, Mr. Ryan said.
The last cycle after a mature market is decline, when all of these factors accelerate and competitors drop, he explained. But, he cautioned: "We're nowhere near there."
We know the market is mature because 95% of companies with at least 500 employees have a profit sharing or 401(k) plan, Mr. Ryan said.
"The growth is in the small market," he said. "For my business to grow, I need to take business away from another company."
Costs are driven by number of participants, plan complexity and the abilities of the plan's administrator or the plan sponsor's human resources staff.
Right now it costs $200 per participant to maintain an account, while fees average $15 per participant, Mr. Ryan said. "Where does the $185 difference come from between explicit costs and fee recovery?," he queried. "It's like Kmart. You make it up in volume."
And it's largely funded by the employees, who are paying 80% of the cost of the benefit, he said.
He then used an audience participation tool made available by Delaware Investments during the first day of the conference -- a mechanism by which audience members could push a button located at their seats to select answers to multiple choice questions posed by the speakers.
Seventy percent of the plan sponsors who joined in the audience participation activity indicated they are getting more pressure from plan participants than in the past regarding the operation of their plans.