Change happens slowly, even incrementally, in the complex 401(k) ecosystem because there are several different groups each with different vested interests and at different levels of development. But that's about to change as small and mid-sized plan sponsors are waking up not only to the realities of defined contribution plans, but also to their possibilities, while the small plan market explodes and mega plans begin to change focus on participants.

There are three distinct groups that are an essential part of the 401(k) food chain, which in turn have three subgroups:

1. Plan sponsors:

   1. The plan itself or participants and employees
   2. Organization sponsoring the plan – senior management
   3. Internal administrators usually from human resources or finance

2. Sellers:

   1. Data Controller and Third Party Administrators
   2. Advisors/Consultants

      1. specialists
      2. the intentionalists
      3. The accidentalists

   3. Asset managers

3. Government:

   1. GET OUT
   2. IRS
   3. SEC

Three other groups are more like observers and influencers, but still important:

1. academy
2. Lobbyists and associations
3. Media

Each group is in four stages of development with different parts at different levels:

1. Unconscious incompetent
2. Consciously incapacitated
3. Consciously competent
4. Unconsciously competent

And, of course, each group is driven primarily by self-interest, which is human nature, even if some may want to help others or at least not harm them.

The most interesting group that seems to be developing the fastest is the plan sponsors, especially the internal administrators and their senior executives. There are three subgroups which are also different stages including:

1. Micro/start-up plans (<1 million dollars)
2. Small to mid to large ($1-500 million)
3. Mega Planet (+ $500 million

The second group has come a long way from believing that their plan is free and they can delegate all fiduciary responsibility to understand the basics even if they are not experts. While still in the second stage of development (consciously incompetent), they are motivated by the fight for talent, which has energized senior managers. This group is beginning to understand the power of workplace savings and how it can not only help employees save for retirement, but also help with other financial matters.

The plan advisor is key, especially the RPAs who led the fee disclosure and fiduciary movements and advocated for the ideal or automatic plan. But they are also at a crossroads as they turn their attention to work and helping employees. Not only is there a need to attract wealth advisors and institutional consultants, but it can also create conflicts of interest for advisers who sell proprietary products or those who charge higher fees as well as conflicts with data controllers.

But the primary driver can and should be the plan sponsor as they become consciously competent, including job savings in their strategic mission of recruiting, retaining and enabling workers to be happier and more productive. A stark contrast to healthcare, which is largely driven by cost.

So while financial planning has become an overused and largely misunderstood term, there are tangible ways that competent plan sponsors can positively impact employees, including:

1. New workers:

   1. car plan
   2. Low cost TDF
   3. paying off student loan debt

2. Older, more mature workers:

   1. managed accounts
   2. HSAs (which all workers must use if available)
   3. pension income

3. All workers

   1. Financial planning
   2. Debt management
   3. Insurance and emergency savings

This awakening, especially among small and medium and even mega plans, will put pressure on their vendors to not only create new types of services enabled by technology and data, but also to showcase the ones they already have. hidden agendas and conflicts of interest. . All of this will drive consolidation of RPAs and providers driven in part by Plan level fee compression as well as attract new entrants as wealth advisors, fintech data controllers and AI serving new needs and the most discerning plan sponsors who are looking for more than fees, funds and fiduciary services.

Make no mistake—it's both an account and a wake-up call to further earn the ranks of DC sellers and encourage new entrants who are either shut out or not particularly interested in the cash, ready and able PE.

Fred Barstein is the founder and CEO of TRAU, TPSU and 401kTV.