Tony Pennino contributed to this article.

The Players

401kForum Based in San Francisco and now reorganized as a unit of Emergent Advisors. The firm is located in the SOMA district of San Francisco -- an area associated with hot dot com firms. Its founder, Drake Mosier, came from Smith Barney where he was familiar with the broker's "TRAK" program. Ted Benna, widely noted as the "father" of 401(k) sits on the company's board.

Financial Engines A prototype Silicon Valley tech startup of the Nineties. Located in Palo Alto just down the road from Stanford University and the offices of Profs William Sharpe and Joseph Grundfest. The pair reportely hatched the concept for the idea in a Stanford cafeteria. CEO Jeff Maggioncalda is a twenty-something with a Stanford MBA. The company also boasts a high profile board featuring Olena Berg Lacy, who formerly headed the PWBA.

Rational Investors Founded by Francois Gadenne and Ben Williams. CEO Gadenne hails from BankBoston and Arthur D. Little where he was team leader of the group that developed a weather forecasting expert system for NASA following the loss of the Challenger space shuttle. Williams, programmer, developed the DOS memory extender in his previous job. The pair sold the Rational to Standard & Poor's, a unit of McGraw-Hill, this year.

Ibbotson Associates Founded by Yale professor Roger Ibbotson, the Chicago-based firm has a long track record as a consultant to the pension and investment community. First moved into the advice market as the developer of the advice model for TCW. Has since provided its capabilities to education firms including Weisenberger and Newkirk.

The Rest of the Field TeamVest A Charlotte, NC-based administrator and recordkeeper serving the small plan market and founded by executives from TrustMark. Recently formed an alliance with Intuit to provide advice through Web portals. Investment Technologies A New York-based firm founded by Brian Rom in 1986. IT announced its entry into the 401(k) advice area in 1998. DirectAdvice A Hartford, CT-based startup that initially targeted the retail investor as Mentum. It has raised money from Japanese investor SoftBank Group and is said to be eyeing the 401(k) market. It is also rumored to be working with E*Trade, which has also raised money from SoftBank. AdvisorNet, LLC Owned by Chicago-based Marquette Associates this service was announced at the end of 1998.

A survey by Fidelity Investments of 1,116 participants in its system shows just how important the Internet is becoming to the average participant.

"The volumes of contact 401(k) participants make through our online channel, NetBenefits, is exceeding the number of phone calls to retirement representatives. Virtually all 6 million participants serviced by Fidelity are Internet-enabled and we receive some 100,000 online contacts daily," stated Kathryn Hopkins, executive vice president at the firm.

Fully 500 of the 1,116 surveyed use the Internet for personal finances.

• 85% use the Internet to check stock quotes,
  
• 75% use it to check their 401(k) balances,
  
• 49% use it to perform 401(k) transactions,
  
• and 36% use it for calculators and other online tools for retirement planning.

Fidelity expects usage of its online services to increase in the near future.

"We've made tremendous progress in the online channel in a very short period. As we work with plan sponsors to provide innovative tools such as PortfolioPlanner to assist with asset allocation strategies and expand the participant service features of NetBenefits, we expect the online channel to continue its meteoric rise," contended Hopkins.

Yet, today few Fidelity clients use Portfolio Planner. TCW, which brough the concept of the prohibited transfer exemption is no longer heard from and the independents Financial Engines and 401k Forum (now renamed as Emergent Advisors) are adding venture capital, employees, and alliance partners at a furious rate. Still, few plan sponsors have taken the plunge after facing the issues of cost and liability. 

Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE