Bank of New York plans to give its 401(k) plan clients a lot more choices beginning next month.
The bank's Vested Choice 401(k) program, which currently offers 30 mutual fund families, will expand to more than 400.
Fund families coming aboard include those managed by Dodge & Cox, Montag & Caldwell, PIMCO, Rainer Investment Management, the Scudder side of Scudder Kemper Investments Inc., and T. Rowe Price Associates Inc.
The bank's plans already use funds managed by Aim Management Group, Alliance Capital Management, American Century, Dreyfus Corp., Federated Investors, Fidelity Investments, Franklin Templeton Group, Janus Capital, Neuberger & Berman Management, and OppenheimerFunds. Its proprietary BNY Hamilton funds are also part of the mix. The expansion encompasses "pretty much" the whole mutual fund marketplace, said Robert A. Goldstein, president of the retirement services division of the bank. It is driven by customer demand, he added.
Bank of New York began beefing up its retirement plan business last summer when it bought Stanwich Benefits Group Inc., Purchase, N.Y., an employee benefits consulting and actuarial firm and record keeper. The acquisition boosted the business at Bank of New York at the time to 150,000 participants in 300 plans, up from 12,000 in 250 plans. A spokesman declined to disclose current figures.
The Vested Choice program had only five fund families before Stanwich came in, said Mr. Goldstein, who was principal of the firm. The addition of Stanwich to the retirement services division-replacing SunGard Data Systems Inc. as the Vested Choice record keeper-enables it to go after bigger corporate retirement plans, bank executives have said.
Many 401(k) plans have lengthened the menu of fund families lately with mixed success, said Catherine McBreen, practice leader for retirement services of Spectrem Group, a San Francisco-based consulting firm.
More choice can breed confusion, Ms. McBreen said. Meeting customer demand has to be balanced with the plan administrator's business strategy.
"It diverts assets from their own funds, which obviously affects long- term profits, unless they're getting overwhelming revenues from fee- sharing" with outside fund families, she said.