expected to be in companies with fewer than 500 employees. Service providers have enormous opportunities to reach out to small retirement plan participants and capture more of their business. To succeed in this market, providers must fully understand the small- business perspective, which drives what plan sponsors really need. Today, the baby-boom generation - many of whose members own small businesses - is focused on retirement. Having little confidence in Social Security, these owners have turned to 401(k)s and similar plans to build nest eggs for themselves and their employees. For the most part, small-business owners and operators lack the time and resources necessary to manage retirement plans. To complicate matters, their employees demand a high degree of attention regarding benefits. When it comes to personal financial planning, banks have some key advantages over mutual fund companies, brokers, insurance companies and other providers. Nonbanks usually can't offer friendly stop-by meetings at local branches, or put participant balances on ATMs or demand- deposit account statements. Sponsors are looking for providers who: *Communicate fees clearly. *Offer turnkey products and services. *Ease administrative burdens. *Present multiple investment choices. *Provide quality education and communication. *Help them manage fiduciary risk. Information related to fees must be communicated clearly in all sales materials. Plan sponsors shouldn't have to wade through clumsy spiral-bound binders to understand what a bank is offering and at what price. A compact brochure with a synopsis of the plan document and a dotted line to sign on are all that is necessary. The busy small-business owner is not willing to deal with 50 or even five providers when it comes to benefit plans. Services should be just a phone call away, and personal attention should always be available. To reduce administrative burdens, plan sponsors expect participant record-keeping services and daily valuation. Technologies, systems, and data must be in place to produce and disseminate accurate, complete, up-to-date participant information. Sponsors are looking for a range of funds, but they don't want to be overwhelmed by too many choices. Typically, five to eight varied investment options should be offered, each with strong performance, brand-name recognition, and at least a five-year track record. Part of the plan provider's role is to assist the plan sponsor in communicating the features of the plan to participants through personal consultation, marketing materials, training, and in some cases financial planning. At enrollment meetings, banks should provide take-home materials for participants that include calling cards listing a toll-free number for participant use when questions arise. Another good reference piece is a branch-location listing that makes clear that branch doors are always open for consultation. Because many members of the baby-boom generation will be retiring in the next five to 10 years, plan performance is crucial. Today's investors are counting on their strategies to pay off by retirement. If they don't, fiduciary liabilities for employers are not outside the realm of possibility. And because small-business owners often carry financial risk personally, managing it is of utmost concern to them. In the sponsor's view, it is the provider's job to help protect and shield the organization and its owners from legal risk. For this and other reasons, ERISA attorneys must always be used by providers when the need to protect their clients and themselves arises. Ms. Errett is chairman and chief executive of the Spectrem Group, financial services consulting firm based in San Francisco.

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