By expanding its roster of wholesalers who sell retirement products to intermediaries like banks, Hartford Financial Services Group Inc. says, it increased 401(k) plan sales by 28.1% last year, and an executive said it could keep up this pace.
The 401(k) business "is the fastest-growing business line that the Hartford has domestically," said E. Thomas Foster Jr., Hartford's national corporate retirement plan leader.
The Simsbury, Conn., unit of Hartford Financial increased 401(k) sales to $2.4 billion last year by expanding its roster of wholesalers, or retirement specialists by 53%, to 104, since the end of 2003, according to Mr. Foster. In 2004-2005, new 401(k) plan sales grew 75.7%.
Similar growth is "inevitable" under a program of working closely with intermediaries, specifically banks, Mr. Foster said. His unit has already had its strongest January, he said.
The company's bank clients include Bank of America Corp., AmSouth Bancorp., Marshall & Ilsley Corp., National City Corp., JPMorgan Chase & Co., Bank of New York Co., Wachovia Corp., Uvest Financial Services, and Wells Fargo & Co.
"We expect growth to be similar in 2006 if not more," Mr. Foster said. "If we can do another 31% [for sales and 401(k) deposits], that is pretty good. When you look at our growth, we have grown steadily for the last four years. Hartford Financial began a major initiative last year to increase retirement plan sales through intermediaries, he said, as part of which it added wholesalers and shrank their territories.
"If you look at the majority of wholesalers in this country, they are dealing with territories that are massive," he said. "It is very difficult when you have a large territory to have the focus you need. You cannot be all things to all people if you are just dealing with too many people. We found our wholesalers were gravitating to a few clients and not focusing on the outskirts. We really didn't want that."
Mr. Foster said Hartford, in some regions, has specialists focusing on specific channels. Most wholesalers were worried these limitations would significantly shrink their books of business, he said, but the opposite occurred.
"It is amazing," he said. "You'd think that when you cut a specialist's region, you'd cut into their pocketbook, but really the exact opposite occurred. It made them focus more, and they developed more opportunities from smaller territories."
As Hartford has tightened its focus, he said, its bank retirement plan assets grew 34.8% last year, to $409 million. Banks have a lot of untapped opportunities to offer retirement plans to their customers, he said. "Banks could dominate if they took a renewed focus on this market," he added.
"There are just so many banks, and each bank has such a great book of business," Mr. Foster said. "Everyone turns to banks. When people need money, they think of their banker. I think if bankers focused on this, the opportunity is endless for both us and them."
Hartford plans to add specialists this year. It announced this month that it had combined its 401(k), 457, and 403(b) businesses into a single team. And Mr. Foster said specialists will be added to sell 403b and 457 retirement plans.
Fidelity Investments also recorded growth after offering retirement products through third-party advisers in 2005. It announced Thursday that its Fidelity Advisor 401(k) platform - a suite of services for employer-sponsored plans offered through third-party financial advisers to small and midsize companies - grew 16%, to $13.5 billion last year.
Fidelity said it set up 380 plans last year, up 44% from the previous year, and more than twice as many of the new plans exceeded $25 million than in 2004. At yearend, the Fidelity Advisor 401(k) business served 2,176 defined contribution workplace retirement plans.
Dave Liebrock, an executive vice president in Fidelity Investments Institutional Services Co., said the growth came from 401(k) plans' continued popularity as retirement savings vehicles.
Competition is stiff, Mr. Foster said. In addition to Fidelity, he said, Hartford competes against Hancock, ING, Principal, and Nationwide.
Tim Benedict, a spokesman for Hartford, said 75,000 advisers offer its financial products but only 2,500 of them peddle its retirement plans. Mr. Foster saw this as delineating a big potential for growth.
"Ultimately, what we want to be is all things to all people," he said. "We want to be their one-stop solution, regardless what retirement product they need. We want to be a one-stop solution for banks, and from there our growth becomes exponential."
