A special from our sister publication, the 401kWire.com.

Outside in New York City, there was a light drizzle under an overcast sky. But inside the Palace Hotel, J.P. Morgan|American Century was holding a symposium for consultants and trying to illuminate them on the services the alliance offers 401(k) plans.

One session was devoted to four plan sponsors, all clients of the alliance. The four were: Marilyn Massengill, assistant treasurer, from Salem, Virginia-based Carter Machinery; Laurie Roepsch, vice president, from Des Moines, Iowa-based Amerus Group (NYSE: AMH); Brian Rhynard, director of defined contributions, from Providence, Rhode Island-based Providence Energy Corp. (NYSE: PVY); and Susan McDonald, director of human resources, from Tulsa, Oklahoma-based Parker Drilling (NYSE: PKD).

One of the topics the panel discussed was how sponsors choose investment options for participants. Roepsch revealed that those at her firm responsible for the plan review the philosophies of each portfolio and sit down with the company's cio.

The four mentioned that they all try to diversify as much as possible. If the fund seems to change goals or philosophies, they contact the vendor directly. Roespch in particular mentioned that a couple of years ago there was a fund that was not performing as well as expected. She phoned her provider and immediately set up a meeting with the manager to express her firm's concerns.

Further, the panel discussed brand name funds. The general consensus of the four was that brand name funds did not matter as much now as they once did. "When there was only newspapers to follow our investments, then having a brand name was important. Our participants would have to go to a daily paper and follow a fund there," Rhynard stated. "So, it was more important for it to be a brand name. Now, with the Internet, that is not so important as more information about more funds is available through that medium."

The sponsors also noted that there was a trend among larger plans to move from mutual funds to co-mingled funds. At least two of their companies are adding lifecycle funds to their lineups.

Massengill mentioned the importance of self-directed options. She said they were attractive features for a plan, but at her company at least only 2% of the employees took advantage of the service. Some of the consultants in the room voiced their opinion that many of their clients are looking at similar services. "The Schwabification of 401(k)'s is becoming pretty wide spread," one consultant stated.

The sponsors allowed from 25%-50% of assets to be placed in a self-directed brokerage window.

McDonald added that her firm has particularly low levels of participation (around 50%) as there were employees spread out across the country and the globe and that one-on-one education was the best remedy for that problem. Lifecycle funds were of paramount for her company, she argued, because of the difficulties of education and of a workforce not well-versed in the particulars of investing.

Rhynard stated that his company had added a bond fund and an international fund last year but that they were not getting a lot of play. 

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