The 401(k) concept may be 30 years old, but plan sponsors are feeling growing pains. It's difficult to encourage employees to participate and save more in these plans when they have been spooked by the biggest bear market since the Great Depression. Plan sponsors are also anxious about how a U.S. Department of Labor regulation slated to take effect next January will affect them.

New department rules issued under Section 408(b)(2) of ERISA will require providers and plan sponsors of defined contribution and defined pension plans subject to the act to clearly disclose services provided, explain fees, reveal conflicts of interest and indicate who is acting as a plan fiduciary (a definition currently being re-examined by the Labor Department).

It's also likely to open doors for financial advisors interested in building a niche in 401(k) plan management for small- to midsize businesses.

"It's the perfect opportunity now because so many of the rules of the game are changing. A newcomer can be just as sharp and experienced as someone who's been in it a long time," says advisor Steven Kaye, president of the American Economic Planning Group (AEPG), a wealth management firm in Warren, N.J.

Kaye, who's worked in pension planning for 25 years and began building his 401(k) consulting practice about a decade ago, says roughly one-third of his business now revolves around helping businesses manage their 401(k) plans. AEPG manages 125 plans with $500,000 to $100 million in assets. More than half the plans cover businesses with five to 50 employees, though some top 1,000.

Recently, Kaye has received a lot more inquiries from plan sponsors who've been hearing about the regulatory changes. "Employers are just starting to wake up to the fact that they have a higher level of responsibility and exposure with these plans," he says.

Sharing and reducing plan sponsors' responsibility and exposure is already an integral part of Kaye's practice. His firm offers to serve as a full-scope consultant in line with Section 3(21) of ERISA, a co-fiduciary role that involves controlling, managing and administering plans. His firm will also act as an investment fiduciary in accordance with Section 3(38) of ERISA for those plans with index fund lineups, assuming responsibility and liability for the investment management process.

"Since we've always been a fiduciary and discretionary advisor, being a 3(21) co-fiduciary was a no-brainer," says Kaye. And working in the 3(38) capacity is "a giant marketing plus for us."

But such arrangements are not usually the case. Instead, approximately 70% of the nation's 401(k) plans were installed and are overseen by broker-dealers-who are not typically plan fiduciaries-or novices who manage just one to four plans, notes Kaye. "That's why this area is so open to advisors," he says.

Until now, broker-dealers have been able to avoid the fiduciary requirement if they only give advice occasionally, and if it's not the primary basis for a plan's investments. Under the new Labor Department rule, though, B-Ds will no longer be exempt if they give advice and charge a fee. Rather than become fiduciaries, many of them are expected to abandon the 401(k) space.