Online 401(k) Offerings Think Small
Financial Service Online (09/00) Vol. 5, No. 9 p.48; Fitzgerald, Kate

Use of the Internet is making it possible for plan providers to deliver automated services at lower costs. More than ever, plan providers are scrambling to supply small businesses with low-cost online 401(k) programs. The current trend in this area points to significant consolidation and market growth over the next two years. The best opportunity for providers will likely come from businesses with fewer than 25 employees. According to the Chicago-based Profit Sharing/401(k) council of America, 70 percent of small businesses do not offer 401(k) plans. Companies with fewer than 25 employees represent as many as 25 million people in the United States. It is easy, therefore, to see why many companies are focusing their online efforts in this area. Additionally, the advent of new wireless technology will soon become available to all 401(k) providers. Fidelity Investments, for example, plans to use cellular telephones, Palm PCs, and other hand-held units. These new capabilities will allow employees to make adjustments to their 401(k) plans in a quick and efficient manner. Similarly, an all-Internet plan is being offered by has developed a platform allowing the employer to perform record keeping, administration, tax reporting, and compliance functions online. Participating employees will use personalized tools to fit individual preferences. Meanwhile, many online providers are supplementing their offerings with a network of stockbrokers. employs the services of Merrill Lynch. For steering small businesses in its direction, DailyAccess rewards Merrill Lynch advisors with finder's fees.

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