(updated with correction)
Rather than buy a record keeper to broaden its DC plan coverage, Vanguard Group Inc., Malvern, Pa., courts small defined contribution plans through an agreement with Ascensus Inc., a Drescher, Pa., record keeper specializing in serving small and micro DC plans.
Since signing the deal in September 2011, Vanguard has added more than 2,000 DC plans with aggregate assets of $4.7 billion, said Jing Wang, head of Vanguard's Retirement Plan Access program. Another 200 plans are in the process of joining the program.
Under the terms of the agreement, Vanguard is the record keeper. Ascensus provides services that can include plan design, record keeping, plan administration, a call center, participant education materials, compliance testing and documentation, and trustee services. Participants can choose among Vanguard funds as well as non-Vanguard funds.
“We have a tendency to grow organically rather than acquire record keepers,” Ms.Wang said. Because Vanguard's record-keeping platform and technology are more suited for midsize and larger plans, “it was not cost-effective” for Vanguard or for potential small plan clients to try to apply its platform to small plans, she said.
When Vanguard announced its agreement with Ascensus, it said it was focusing on DC plans with assets up to $20 million. Now, Vanguard offers this program to plans with assets as high as $80 million, and many clients are in the $30 million to $40 million range. “We also have many start-ups,” Ms. Wang said.
The program also is marketed to fee-only advisers and to third party-administrators who work with DC plans.
