To companies that service 401(k) plans, all customers are beginning to look alike in the kinds of services they demand.

A plan sponsor with a few hundred employees is looking for the same things as a customer with 10,000 employees.

They want the most comprehensively bundled plan packaged with the best technology, because their administrative resources are stretched to the limit.

These commonly held buying criteria have become a driving force for vendors in the 401(k) marketplace.

It also presents both challenges and a big opportunity for banks.

One of the most significant selling points for employers in the market for a 401(k) plan is the availability of a "bundled" plan - combining investments, record keeping, employee communication and education, and trustee administration in one package.

In most markets, small plan sponsors expect that their 401(k) package will offer access to all of these features, whether or not they select them for their plan. Larger companies look for the richest bundle of services they can negotiate - at the lowest price - in terms of service and technology.

The national mutual fund companies have set the standard on these issues, creating a growing expectation that bundled services such as daily valuation of invested balances, operator-assisted voice response, and well- designed educational materials will be part of all plan packages.

Administrative simplicity is the single most powerful selling point for virtually all plan sponsors. Vendors who offer the most accurate and timely record keeping capabilities - and can show a proven track record with them - will rise head and shoulders above the rest.

Banks that want to offer 401(k) services run critical risks if they ignore the fact that bundled 401(k) programs are leveling the playing field.

* They may end up servicing the declining number of defined benefit plans.

* They may concentrate their efforts on providing only partial and low- value-added services, such as concentrating on trustee services, as part of unbundled plans.

* They may be positioning themselves to serve only companies with exceptional needs such as fully self-directed plans which offer individual participants an unlimited choice of investments.

While some providers have made a strategic decision to seek this type of business, the potential for long-term profits in the 401(k) business is clearly in favor of providers who offer a total solution.

The challenge to develop and offer a total solution presents an exciting opportunity for banks that want to be profitable 401(k) players with small and midsize companies.

Mr. Paterson is a consultant with Spectrem Group, a financial services consulting firm based in San Francisco.

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