Banks, mutual fund companies, and insurers say the recent decline in workers’ confidence that they are saving enough for retirement could be good news for their 401(k) businesses, which have been enduring flat growth for the past two years.

But observers say that if trends in the 401(k) market continue, no matter what a plan sponsor does to improve offerings, administration, or other plan needs there’s no guarantee that participants will do what they need to do: defer more salary or manage their retirement assets more aggressively.

“We have been aware for some time that people were not participating sufficiently in retirement savings plans, but the bull market obscured that,” said Ron Hurt, vice president of retirement savings at MetLife. “Fortunately, market volatility has gotten people to look at their plans again,” which he says is a good thing.

According to Chicago’s Spectrem Group there was $1.687 trillion in 401(k) plans at the end of last year, just $2 billion more than a year earlier and $327 billion more than at the end of 1998.

The 2001 Retirement Confidence Survey, compiled by Mathew Greenwald & Associates and by the Employee Benefits Research Institute, reported a drop in consumer confidence in their retirement assets. Executives at several financial institutions say the drop could help their efforts to encourage stronger participation in their defined contribution plans.

The survey found that 63% of workers are confident they will have enough money to live comfortably throughout their retirement, down from 72% last year — a statistic that the Greenwald firm’s president said tracks the equity market, which “is probably a lot closer to reality” for many individuals.

“There is a lot of evidence that Americans are not spending enough for retirement,” said Mathew Greenwald. “Workers have long underestimated how much they’ll need to retire.”

Still, “we are talking about people 20 to 25 years away from retiring,” Mr. Greenwald said. “It is remarkable how people make judgments based on yesterday’s paper. But if it gets them to adjust their portfolios, then it is worth it.”

Less-confident workers can do one of two things, he said: put aside more money to fix their asset allocation plans, or continue to deny there is a problem.

Some banking, mutual fund, and insurance companies that sponsor 401(k) plans are looking to take advantage of consumer concerns — which has spurred attention by participants to retirement savings — by educating them to do more to manage their retirement assets.

For example, First Union Corp., which has $41 billion of assets in 401(k) plans, visits plan sponsors annually and runs contribution campaigns to encourage participants to increase their 401(k) savings.

“People do their allocation and want to forget about it,” said Mary Hollingsworth, vice president and manager of participant account services for First Union. “It is our job to go out and remind them that the savings must continue.”

Several companies, including MetLife, have also upgraded their retirement Web sites to help users manage their 401(k) assets more easily.

But Karen Birr, a retirement planning consultant with U.S. Bancorp Piper Jaffray, said that consumers have not responded to sponsors’ education efforts. In a survey U.S. Bancorp did last fall, 22% of participants who were less than 10 years away from retirement and 44% of those less than 20 years away said they had not saved enough to maintain their standard of living when they retired.

Yet, despite these concerns, 52% of the respondents who said they hadn’t saved enough said they do not go to a financial professional to get help managing their retirement assets. In addition, 59% of the survey’s retired respondents had not adjusted their allocation since retiring.

Others say more investment alternatives is the key. But according to research by Merrill Lynch & Co. and the financial research firm Barra RogersCasey, though the average number of investment choices available to 401(k) plan participants has doubled over the past three years, 80% of the participants have never changed their initial allocation.

“We have felt for years that people have not been saving enough or been active enough with their 401(k) savings,” said Michael Falcon, chief operating officer of Merrill Lynch’s benefits and investment solutions division. People seem to believe “making an initial allocation is enough,” he said — a statement echoed by several executives.

Ann Mahrdt, a retirement consultant with Spectrem Group, said there’s little point in sponsors loading their plans with all sorts of services and options if people don’t use them.

“If most participants use three of the 10 options offered, what good is it loading up another seven or eight?” she asked. “When we talked to participants in focus groups, they thought just being a participant in a 401(k) plan was a good enough retirement strategy.”

Ms. Birr said: “It is phenomenal, the lack of understanding as it relates to the amount of retirement assets that people need to accumulate in order to retire comfortably.

“It seems like only when the market turns do financial professionals hear their phones ringing and have people concerned about retirement assets.”

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