"On 401(k)s, I know enough to get myself in trouble and not enough to get myself out of it," he said.

"Sponsors' and participants' needs are so highly specialized. We've never thought it was an area you could just dabble in. It's a high-touch, highly regulated business that needs expert attention. That's not something you can fake," Powell said after his firm announced a merger with Troy, Mich.-based Greystone Financial Group.

Now, when Powell's clients ask for help with their business' 401(k)s, he won't have to turn them down. That's because Greystone has a committed team serving as 3(38) advisors that provides customized solutions for plan sponsors.

Todd Moss, who co-founded Greystone in 1993 and will serve as senior partner at Polaris Greystone Financial Group, or PGFC, said his firm targets plans with $2 million to $15 million in assets, but also works with larger plans with assets up to $100 million.

"Throughout the 401(k) space, we see an underserved, overpriced market," Moss said. "The smaller the plan, the less transparency there tends to be with fees. When we come and take over a program in the smaller space, we typically see plans that show a lack of flexibility, and we see participants that have never had the type of hands-on experience we provide at enrollment and through their relationship with us."

Moss is in complete agreement with Powell's instincts on 401(k)s—advisors stand little chance of serving sponsors and participants well if they don't bring a specialized capability.

Recent data from Cerulli Associates, a provider of data and analytics to financial services firms, show that about half of the $1.3 trillion advisor-sold defined-contribution market is controlled by retirement plan specialists, which Cerulli defines as firms that generate a minimum of 50 percent of their revenue from retirement plans.

Only 5 percent of advisor firms are considered specialists by that benchmark, a number that has remained consistent, according to Jenn Jones, senior marketing manager at Cerulli.

"The number of specialists isn't growing, but their influence is, as that small amount relative to all advisors is controlling a larger share of 401(k) assets," according to Jones.

"It's what makes retirement specialists such a highly targeted relationship from the perspective of service providers. They are a small group in terms of numbers, but have a broad reach in terms of assets," she said.

Cerulli's analysis of the small and midsize defined-contribution market shows that 45 percent of advisor specialists do not act as fiduciaries under the Employee Retirement Income Security Act.

Of those that are fiduciary advisors, only 13 percent serve in a 3(38) capacity, a distinction that relieves plan sponsors of fiduciary liabilities for the investment decisions made for a plan.

Kristie Guidiano, who headed Greystone's retirement plan division and will serve as director of qualified plans at PGFC, says participants in plans that aren't working with a plan specialist—or a fiduciary, for that matter—too often end up paying too much in fees.

"Obviously, participants' costs can vary depending on plan size," Guidiano said. "At the $25 million threshold, we don't think participants should be paying more than 100 basis points in fees. But plans of all size are susceptible to poor design, and that can mean high costs on top of bad outcomes."

Small or large, she said the plans her team benchmarks routinely suffer from unnecessary costs. "We've never come across a plan that we can't improve in that area," Guidiano added.

From her vantage point, the flexibility that the new partnership at PGFC says is systemically missing in the 401(k) market is the key to delivering cost-effective solutions for sponsors and participants.

"We have no prototype plan for any size of 401(k)," Guidiano said. "Everything is customized. We build off of an open architecture platform, and we work with record keepers that afford us the flexibility we think we need to do what's best for our clients."

The merger with Polaris will give her access to an extended roster of expert money managers, which the new team expects will bring real value for participants. Guidiano cites Polaris' expertise with exchange-traded funds as an example of how the merger will bring value to the 401(k) side of the business.

PGFC's total assets under management are approaching $1 billion. The firm is looking to expand its geographical reach, identifying synergies between the existing Midwestern and West Coast footprints, with an eye to leveraging its customized 401(k) solutions in other major money centers. Both firms have a toehold in the Houston market.

"Cloud-based customer relationship systems have really improved our ability to manage relationships from afar on the wealth management side of our business," Powell said.

"We're going to continue to utilize technology to grow in new markets on the 401(k) side, but the reality is that it will always be a very high-touch business, especially when it's done right," he added. "That's going to mean additional boots on the ground as we grow our reach. That's an exciting prospect for us."