have entered into an alliance to offer services in the small plan market, David Mathwig
, director of product development, told InvestmentWires. The two firms will split responsibilities and functions to reach clients in this arena.
"In our direct marketing unit, we have a business retirement services group, which has provided a number of products to the small business market. But we have never really offered a full service 401(k) product in this area," Mathwig reported.
The alliance will make eight funds available to clients. Two are from JP Morgan
-- the Disciplined Equity Fund
) and the U.S. Small Company Fund
). The other six funds are from American Century: a money market fund, two strategic allocation fund, the Income and Growth Fund
), the Ultra Fund
), and the International Growth Fund
). A brokerage window will also be available.
"We looked at 10 different potential alliance partners. We chose ADP because they have a national sales force and national enrollment coverage teams. They are also very strong with their data processing capabilities and in providing complete recordkeeping services," said Mathwig.
In the alliance, American Century will generate the leads, provide the marketing, and manage the investments. ADP will handle the recordkeeping structure, infrastructure, sales, technical support, and compliance. Participants will access information from ADP's site, which also has transactional capabilities. The alliance will also be introducing a website for plan sponsors shortly.
"When you move into the small plan market, you have to be a little more packaged. More streamlined. We're going to win on price and delivery. This service may not be as customized as the one for larger plans, but we are offer a high-tech, low cost product for small plans," Mathwig continued.
"We have four strong companies behind this product. We have American Century, ADP, JP Morgan, and State Street Bank & Trust
, which will act as trustee for the service," he concluded.
The service was launched on October 1, 1999. According to Mathwig, the alliance has close to $40 million in assets under management. Expect direct mail and Web promotion campaigns to begin next year.
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