Massachusetts Financial Services, one of the nation's oldest mutual fund firms, has teamed up with the nation's leading community bank trade group to offer 401(k) retirement plans to small-business customers.

The plans, geared toward businesses with 25 or fewer employees, are being offered by some of the 5,500 small banks represented by the Independent Bankers Association of America.

Massachusetts Financial, Boston, will manage the mutual funds behind the plans and Bankers Systems, based in St. Cloud, Minn., will be the administrator.

Bankers Systems is known for its expertise in the small-business market and for its competitive pricing-and low costs are a key to signing up small businesses, said Bill Reid, president of IBAA Financial Services, the trade group's broker dealer.

"The cost of administering a 401(k) plan had been a major barrier to small business for years," said Mr. Reid. "We've been looking for pricing that really fits the small-business niche, and this is what we've found with Bankers Systems."

Because the banks under the IBAA banner have close ties with small businesses in their communities, there is lots of potential for marketing retirement plans through them, said Lisa Jones, senior vice president and director of the financial institutions division for Massachusetts Financial. "This product is designed exclusively for that marketplace," she said.

Bankers Systems helped make 401(k) plans more affordable to small businesses by designing them in a more simplified-and thus less expensive- way. The plans are noncustomized. Clients get a price discount for using a standard 401(k) model with six mutual funds. More options are available for a higher price.

Mr. Reid said that fewer than a dozen plans have been sold since they became available in April, but he added that marketing efforts are just gearing up. About 40 banks offer the 401(k) plans. Burton J. Greenwald, a Philadelphia-based mutual fund consultant, said selling 401(k) plans to small businesses can turn into a "misadventure" unless the seller has costs under control.

The small-business market is viewed as attractive to a variety of marketing interests. Although about 95% of Fortune 5 00 companies offer their employees 401(k) plans, just a quarter of firms with fewer than 100 employees do so, said Mr. Greenwald.

"That appears to be a sexy market to explore," he said. "However, the efficiencies of that market size can't compare with the efficiencies of serving hundreds or thousands of employees, and therefore the costs are much higher."

Mr. Greenwald said that the IBAA's new approach "possibly could work," as long as customers are satisfied with fewer choices.

Massachusetts Financial, which has about $60 billion of assets under management, also offers mutual funds and variable annuities through its marketing alliance with IBAA.

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