Financial services professionals overwhelmingly agree there are big opportunities in the micro-small plan 401(k) market.
According to a series of studies conducted by Guardian Retirement Services, nearly 65 percent of respondents say they believe that niche market holds massive potential for retirement advisors and others in the financial services field.
Currently, more than 50 million Americans participate in company-sponsored 401(k) plans, accounting for $3 trillion in assets. Of that total, 90 percent work at small businesses, with plans holding less than $10 million in total assets. A deeper look at the data shows 80 percent of those workers are enrolled in micro-small plans holding less than $2.5 million.
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With total 401(k) assets projected to hit $4 trillion by 2015, those surveyed were optimistic about the opportunities in this sector, especially given the growing popularity of automatic enrollment in employer-sponsored retirement plans.
The average participation rate for companies offering auto-enrollment is 83.1 percent, compared to 64.7 percent where the enrollment remains "opt in," according to Aon Hewitt research.
Respondents optimistic about the small-to-micro-small markets cited a few noteworthy concerns about working with these clients: Time management and resource management.
Translated: Helping more clients with less money isn't the easiest way to do business.
Ranked lower on the list of concerns were fiduciary responsibilities and government regulations. It seems these responsibilities translate easily from larger-to-smaller clients. However, respondents believed with the right partners, addressing the small-to-micro market could be a successful endeavor.
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