Big Money Moves: Chasing 401(k) Fund Accounts
Download MP3How important is the 401K fund market? Well, here's how important: one of the largest, if not the largest, fund managers, BlackRock, is buying a stake in a 401K startup that helps small businesses. The 401K is the largest holder of consumer wealth besides real estate—besides your primary residence. You have equity in your house, but besides that, your next biggest holding of funds is usually a 401K, a tax-advantaged fund. So, this is something where the big players in the financial industry are taking note.
They're starting to say, "Wait a minute, how can we be involved with this?" Small businesses are ripe for growth because, up until recently, most small businesses did not offer a 401K fund to their employees. This is a growing market, and there are more small businesses than large businesses. A large business has offered 401Ks for a long time, but there are only so many of those. Look at Fortune 500 companies—there are only 500. The definition of even Fortune 1000 companies—there are only a thousand. But there are millions of small businesses.
An organization like BlackRock can take advantage of that volume to look for a new source of income, a new market for their offerings, by buying this company that offers services to small businesses to provide a 401K plan to their employees.
