In fee fall

When it settled fraud charges with the Securities and Exchange Commission last December, Alliance Capital Management agreed to cut its management fees by 20 percent over the next five years. Optimists in the business held out hope that this would be an isolated incident, but most executives braced for a rash of fee reductions.

Sure enough, the rollbacks soon began. In late January, Putnam Investments, which had earlier settled SEC charges of market timing, pledged to reduce its fees by $35 million a year. Shortly thereafter MFS Investment Management settled federal and state civil fraud charges, agreeing to pay $225 million in penalties and cut its management fees by $125 million over five years, or about 6 percent a year. Industry officials say that management fees will keep falling.

“随着更多管理人员决定降低费用，这将是一场跟随的领导者，”Charles Schwab＆Co.的雇主服务部门高级副总裁Benjamin Brigeman说，聘请了150亿美元的资产在管理下。

对于401（k）提供商来说，这款互助基金公司的这种坏消息将甚至更糟糕的是，近期利润率下降并加速行业整合。由于丑闻资金削减了他们的费用，其他401（k）提供者 - 保险公司，经纪人和涉及丑闻的资金 - 将感到强迫与他们的削减相匹配，切入自己的收入。与此同时，费用不可取地升高。遵守新的交易和市场时机的新课程规定增加了管理和管理401（k）的成本。不可避免的结果：401（k）提供者的利润率，从2000年的15％萎缩至去年5％，将进一步下降。“我们已经看到了这么多的整合，但在丑闻之后，我们将更多地看到更多，”罗德岛基于顾问Geoff Bobroff总结了。他估计，在五年内，十大提供商将控制80％的行业资产;今天20家公司控制总资产的85％。

The interdependence of mutual funds and the 401(k) business is striking. Most industry leaders are mutual fund families, which now account for 46 percent of all assets in defined contribution plans, according to Boston-based consulting firm Cerulli Associates. That's up from 36 percent in 1996 and just 9 percent in 1990. At the same time, defined contribution assets represent 16 percent of all mutual fund assets, up from 6 percent in 1990.

在401（k）业务中，它是投资管理，提供真正的利润，利润率约为30％，而记录甚至几乎没有打破。对于捆绑的提供商，记录保留和金钱管理由一家公司处理;在其他情况下，单独的录音机处理文书工作，而金钱经理照顾投资组合。

Beyond the attractive margins, asset managers find an added appeal in defined contribution plans -- a reliable, steady cash flow. Since employers and employees make regular contributions year after year, 401(k) accounts are, in the industry jargon, very sticky assets.

"The defined contribution business remains very productive for us," says Richard Buoncore, CEO of $49 billion-in-assets Victory Capital Management, a subsidiary of KeyCorp. That's why Victory continues to handle the investment management of about $1 billion in defined-contribution-plan assets even though it sold its 401(k) recordkeeping business to Principal Financial Group in June 2002.

确定贡献计划的费用结构说明了为什么资产管理是更具吸引力的业务。投资管理费用平均120个基点，100个基点到了货币经理和20个职务人员。12B-1分配费用平均为50个基点，如果涉及一个录音机和经纪人之间的均匀分开。转让机构费用，通常每位参与者每位5美元或10美元，转到录音机。

收入已经在压力下，由于401（k）资产在三年熊市期间大幅下降，并且在过去一年中只部分恢复。根据Cerulli Associates的说法，平均401（k）账户余额从1999年的38,450美元的高峰降至2002年底大约27,000美元，然后在2003年底推定了高达29,700美元。削减费用仅加剧了这种情况。

"Will it hurt the industry for fees to be lowered?" asks Ward Harris, founder and managing director of Emeryville, Californiabased McHenry Consulting Group. "Does it hurt to do sit-ups?"

只是谁会感到痛苦仍然尚不清楚，因为记录人员和金钱经理尚未确定他们将如何消除减少费用。行业观察家期望记录人员将努力努力 - 并且可能成功地保持其目前的管理费用。“除了最大的投资经理的情况外，削减的费用将不得不从投资经理的份额中出来，他们可能能够谈判记录员的一些减少，”CERULLI顾问。

As reduced revenues squeeze margins, higher costs in meeting new administrative and regulatory burdens could really tighten the vise. Case in point: The SEC has proposed a "hard" 4:00 p.m. close for all mutual fund transactions. If that reform, designed to eliminate the possibility of late trading, is enacted, providers will have to revise their systems to meet the new deadline. That will certainly be an expensive undertaking.

"It's not just a matter of changing a table or two," says F. William McNabb, head of the 401(k) business at Vanguard Group. He estimates that money managers will spend "hundreds of millions of dollars" on a 4:00 p.m. close. Peter Smail, president of Fidelity Employer Services Co., agrees with that estimate. "But this is simply a matter of business development," he says. "While it may mean that we don't invest in a few other things, we are spreading these costs over the base of 10 million participants."

文书工作的麻烦可能会增加法e costs by as much as 20 percent, estimates consultant Bobroff. Schwab's Brigeman suggests that the 4:00 p.m. trading cutoff would mean that when a participant wants to rebalance a portfolio, the trades would settle over at least two days and maybe three. With a hard 4:00 p.m. close, 401(k) investors on the East Coast would have until 1:00 p.m. to place an order. Over the several days that trades settle, Brigeman says, 401(k) administrators will have to collect sweep fees -- both interest and transaction costs on short-term money market accounts.

Postscandal, 401(k) providers will face higher costs as they redouble their efforts to prevent investors from rapidly trading in and out of the funds in their plans. Industry observers anticipate growing business for firms that can help providers meet their new obligation to police market timers.

401（k）记录保留和行政业务有长期奖励规模，提供商提供超过100万人的参与者，享有有意义的规模经济。这些新的成本负担只会增加较小球员的压力。控制今日当今85％的20个资产的20个定义捐赠提供商只有68％，截至1999年。401（k）行政当局的第1号和第2名球员持续了五年：保真投资是市场领导者，行政管理资产为40.3亿美元（其自身资金的47％）和890万人参加者;休伊特协会在第二次排名第二，资产1870亿美元，约有500万人参加者。

去年三项401（k）提供者，每位参与者约有100万人参加，退出了这项业务：由审慎财务购买的Cigna公司;北方信托退休咨询，现在拥有休伊特;和PFPC退休服务，由Wachovia退休服务购买的PNC财务单位。他们都确定退休服务不是他们的中央企业之一。

1月初,Wachovia定义的contribution business of Bank of New York Co. Wachovia acquired BoNY's recordkeeping and trustee business, leaving marketing and servicing to BoNY. "It's true that our business will only get squeezed more," says Joseph Ready, director of Wachovia Retirement Services. "But scale for the sake of scale doesn't work. Acquisitions have to fit strategically."

As the pace of consolidation quickens, industry survivors will have to watch their step.