Bank of New York, which has traditionally focused its retirement plan sales efforts on large companies, is moving down-market.
The $49 billion-asset banking company has developed a 401(k) program that midsize companies - those with up to 3,000 employees and investable assets of at least $30 million - can offer their wor/kers.
Bank officials said they launched the program because they expect a boom in 401(k) plans and other tax-deferred retirement savings plans at midsize and even smaller companies.
"Everyone was initially interested in the larger plans because of the bigger (profit) margins, but this is where the market is now," said Curt Yamaoka, senior vice president.
The plan is valuated daily, allowing participants to access their accounts through an automated telephone system.
To gain the economies of scale needed to work with midsize companies, Mr. Yamaoka said Bank of New York has automated many transactions that were once done by hand. Fund transfers and requests for information, among other things, are now handled by a telephone response system.
"The plans have to be as automated as possible; otherwise the staff costs would be more than the margins can bear," Mr. Yamaoka said.
In another measure to cut costs, Bank of New York is offering midsize companies a trimmed-down list of investment options.
Along with the banking company's proprietary BNY Hamilton Funds, plan sponsors can choose funds offered by Fidelity Investments, AIM Management Group, and Dreyfus Corp. Company stock can also be added as an investment option.
Mr. Yamaoka said Bank of New York already manages 70 401(k) plans and hopes to boost that figure to more than 150 plans by the end of 1995.
