Retirement savings in the U.S. may swell to $4 trillion over the next four years and the nation’s largest banks are angling for a bigger share of that money.
Bloomberg reports Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. are adding staff, creating easier-to-use technology and competing on fees in an effort to win more of the $2.9 trillion Americans held in 401(k)s savings plans as of September from traditional account managers such as Fidelity Investments and Vanguard Group Inc. That number may reach $4 trillion by 2015, according to Cerulli Associates, a Boston-based research firm.
“It’s one of the top priorities,” at JPMorgan, Michael Falcon told the news service. Falcon’s job as head of retirement in the U.S. and Canada for the bank’s asset management unit was created in January. The New York-based company is the second-largest U.S. lender by assets behind Bank of America.
The competition may mean lower costs and more choices for employers and savers, added Laura Pavlenko Lutton, an editorial director in the mutual-fund research group at Chicago-based Morningstar Inc.
Participants in the most expensive plans pay more than 6% annually, while the lowest-cost ones charge less than 10 basis points Ryan Alfred, co-founder of San Diego- based BrightScope told Bloomberg.
Over the past two decades, 401(k)s have become the fastest- growing retirement-savings option for U.S. workers, according to the Washington-based Employee Benefit Research Institute. They’re the most common type of defined-contribution plan, which lets employees defer a portion of their salary into an investment account and generally not pay taxes on the money until it’s withdrawn during retirement.