Defined contribution plan providers saw a 9.6% gain in assets under record keeping for the year ended June 30, to nearly $2.94 trillion, according to Pensions & Investments' annual survey.
That growth is down from the previous year's 12% growth and one observer said the lower growth rate reflected lower stock market returns during the survey period.
The assets in this year's survey grew from the $2.68 trillion reported in 2004. For the year ended June 30, the Russell 3000 index returned 8.1%; a year earlier, the Russell 3000 returned 20.5%.
Seventy-six providers responded to this year's survey, compared with 80 a year earlier.
Lifestyle funds, target funds and managed accounts drove the growth in assets, according to vendors.
Rick Meigs, founder of 401khelpcenter.com, Portland, Ore., an information site dedicated to 401(k) plans, said those areas are the biggest trends in the DC marketplace. He said providers were more aggressive this past year in rolling out new products and services to gather assets.
"We've been in a mature market for years … anyone that wanted to add a 401(k) has done so already, so the new growth, on the asset side, are in managed accounts and lifecycle options," said Mr. Meigs. "There is an effort to help participants because providers now recognize that participants will never be good investors on the whole. These products allow them to make simple choices," he said.
The 10 largest record keepers accounted for $1.97 trillion, or 67% of the assets, practically unchanged from the 66.8% of the total the top 10 represented a year earlier.
The lineup of the top five record keepers ranked by assets under record keeping in 2005 remained unchanged with Fidelity Investments, Boston, retaining the top spot with $624.7 billion in assets under record keeping. Rounding out the top five were TIAA-CREF, New York; Hewitt Associates Inc., Lincolnshire, Ill.; CitiStreet, Quincy, Mass.; and Vanguard Group, Malvern, Pa.
Making it into the top 10 this year, moving to 10th from 13th, was JPMorgan Retirement Plan Services LLC, New York, with $73.5 billion in record keeping assets — a 25% increase from 2004.
David Embry, managing director, sales and marketing for JPMorgan, said most of the retirement unit's success could be attributed to a select sales model for larger DC plans. "We don't go after just anybody. We want to do new business with plans between $20 million to billions, so we didn't do 500 plan conversions. Most of our growth came from the $50 million to multibillion plan size," he said.
This year, two of the top 10 providers lost assets. Seventh-place Merrill Lynch Retirement Group, Pennington, N.J., lost 2.6% of assets in the latest survey, with $85 billion under record keeping as of June 30. Hartford, Conn.-based ING, in ninth place, lost 1.2% of assets, reporting $74.8 billion in assets.
Cynthia Hayes, first vice president at Merrill Lynch, speculated the slight drop in assets was due to market conditions.
Merrill Lynch saw continued interest in integrated benefits, she noted. "A third of all RFPs want integrated services. They want the consolidation of all retirement and wealth accumulation programs like DC, DB, non-qualified plans and equity awards."
The firm also is seeing interest in managed accounts and lifecycle funds. "It's not only about mutual funds anymore. We need these types of options for unsophisticated investors," she said.
A spokesman for ING did not return phone calls.