By
Producers selling 401(k) plans to the small business market may have little to fear from Web-based competitors, a new study from Celent Communications suggests.
The Boston research firm found low adoption rates of so-called e401(k) plans, which offer small businesses automated administration, recordkeeping, payroll deductions and even computerized advice.
It is in the last area that e401(k) vendors appear to have stumbled, according to Celent.
"Providers are reconfiguring their business after online advice failed to attract many users," Celent states in its report, "401(k) Technology Update."
The sticking point appears to be that businesses and 
their employees prefer to talk to live advisors about their investment goals and choices.
About 20% of 401(k) participants prefer to manage their investment strategy on their own, says Celent senior analyst Pamela Brewster.
"For these do-it-yourselfers, online advice is fine," she says.
The vast majority of participants, however, do not feel well served by an automated advisory system. This kind of system provides online recommendations of an investment strategy based on the age, financial goals and other criteria the investor punches in from a keyboard.
"I think automation can give the investor a quick and dirty sense of shortfalls or excesses they may have in their retirement plan, but obviously it cant really do the job of helping the individual set goals and priorities," Brewster says.
That, she notes, requires the participant to have a relationship with an advisor.
"There is a lot of opportunity for producers to sell plans," Brewster says.
Another problem for e401(k) providers is that small business plans dont have a lot of assets.
Businesses with 250 to 999 employees have an average of less than $15 million in total 401(k) assets to manage, according to Celent (see chart).
