Banks Face Image Problem as 401(k) Providers

Though banks control 23% of the small business 401(k) market, they'll have a tough time keeping that share if a new customer survey holds water. The recent survey of more than 1,100 small businesses by Spectrem Group, a San Francisco consulting firm, says that insurance companies, not banks, are the provider of choice among companies that are likely to start a retirement plan. Insurance companies captured 25% of the vote, mutual funds 21%, and full-service brokerage companies 10%, according to Spectrem. And what of banks? They only received 2% of the vote. Some observers said insurance companies were more aggressive than banks when it came to soliciting customers. A spokesman for Spectrem noted that small businesses were likely targets for insurance brokers because they have existing relationships with business owners. The study, which also looked at the perception of these small businesses, showed the businesses were more likely to view banks as proficient record keepers than as top-notch asset managers. - Cheryl Winokur