The largest mutual fund company in the world is about to go after small 401(k) plans. Today Vanguard [see profile] revealed that, next quarter, it will launch a bundled 401(k)-product aimed at plans with less than $20 million in assets. The move represents a departure from Vanguard's traditional focus on large plans in the 401(k) world, and it contrasts with the departures in recent years of many mutual fund firms from the bundled 401(k) business, especially the small market.
VALLEY FORGE, Pa., Sep 14, 2011 -- Vanguard, one of the world's largest investment managers, announced today that it will offer a bundled 401(k) plan service for small companies that combines Vanguard's low-cost investment options and indexing expertise with the small-plans recordkeeping expertise of Ascensus, a leading recordkeeper and administrator of retirement plans. The service is designed for 401(k) and profit-sharing plans with assets below $20 million.
The new comprehensive, turnkey service will include funds, recordkeeping, call center services, compliance testing, participant education, and optional services such as participant advice, self-directed brokerage, and trustee services. The service is expected to launch in the fourth quarter with "all-in" plan costs--total investment and recordkeeping costs--anticipated to be among the lowest in the industry.
"Vanguard believes that small businesses should be able to offer high-quality, cost-effective retirement plans to help their employees save efficiently for their futures," said Kathy Fuertes, head of Vanguard's Retirement Plan Services for small business. "By working with Ascensus, we have developed a streamlined way for these companies and their plan participants to easily access Vanguard's low-cost funds and a range of investment and retirement plan services."
The service will be offered directly to plan sponsors as well as to fee-only advisors who serve sponsors and may be interested in a bundled approach from two of the most trusted providers in the industry. Vanguard received the top ranking for overall satisfaction as well as satisfaction with investment performance and value for cost from plan sponsors in Boston Research Group's 2010 Plan Sponsor Satisfaction and Loyalty Study. Ascensus was ranked No. 1 in favorable impression of micro-plan providers in a Cogent survey published in June 2011.
"We are extremely pleased to be able to team with Vanguard to create this bundled retirement plan solution, which we believe will bring significant value to small businesses and their employees," said Bob Guillocheau, president of Ascensus.
Vanguard, headquartered in Valley Forge, Pennsylvania, is one of the world's largest investment management companies. Vanguard manages more than $1.6 trillion in U.S. mutual fund assets, including more than $160 billion in ETF assets. Vanguard offers more than 170 index and actively managed funds to U.S. investors and more than 60 additional funds in non-U.S. markets. Vanguard provides investments to more than 8,500 defined contribution plans, including recordkeeping and investment services to more than 3.4 million participants in nearly 2,400 plans. Vanguard is also a major provider of investment, advisory, and recordkeeping services to defined benefit plans. For more information, please visit www.vanguard.com .
With more than 30 years of industry experience, Ascensus delivers high-quality outsourcing solutions for every segment of the retirement plan marketplace. A division of Crump Group, Inc., a leading provider of retirement services and the leading insurance wholesaler in the U.S., Ascensus services nearly 27,000 defined contribution plans and administers over 1.5 million IRAs. Learn more at www.ascensus.com .
All Vanguard asset figures are as of August 31, 2011, unless otherwise noted.
Optional services to be provided by third-party providers that are not affiliated with Vanguard.
Investments are subject to risk. Investments in bond funds are subject to interest rate, credit, and inflation risk. Diversification does not ensure a profit or protect against a loss in a declining market.
Vanguard Marketing Corporation ("VMC") is the distributor of the Vanguard Funds and a subsidiary of The Vanguard Group, Inc. VMC is a registered broker-dealer, member FINRA and SIPC. Retirement plan recordkeeping and administrative services are provided by The Vanguard Group, Inc. ("VGI"). VGI has entered into an agreement with Ascensus, Inc. to provide certain plan recordkeeping and administrative services on its behalf. Ascensus is not affiliated with VMC, The Vanguard Group, Inc., or any of its affiliates.
For more information about any fund, including investment objectives, risks, charges and expenses, call Vanguard at 800-523-1188 to obtain a prospectus. The prospectus contains this and other important information about the fund. Read and consider the prospectus information carefully before you invest. You can also download Vanguard fund prospectuses at vanguard.com.
Vanguard Marketing Corporation, Distributor of the Vanguard Funds.
The Boston Research Group and Cogent Research surveys were syndicated studies conducted independently by those two organizations. Vanguard neither commissioned nor paid to be included in them. Boston Research Group and Cogent Research have conducted unrelated, custom market research for Vanguard in the past.