But being a mover and shaker paid off, and Miller wangled business from banks and broker-dealers unwilling to watch the sun come up with truckers. “That’s how I cut my teeth, one plan at a time,” he says.

This new business of advising the actual participants, rather than just glad-handing the C-suite suits, was a new, unformalized cottage industry. A lot of employers were trying to migrate from profit-sharing to 401(k) plans, says John Curry, Captrust’s marketing chief. The move to participant-directed investing was a big deal, he says, and many people, including companies’ top executives, were afraid of it.

Miller’s team spun off from Interstate/Johnson Lane in 1997, entering an RIA affiliate partnership and back-office relationship with the company until it was eventually absorbed by Wachovia and First Union a couple of years later, spinning off various versions of the affiliated “CapTrusts” into the world. (Miller’s group was among those that kept some version of the name, calling itself CAPTRUST.) He took advised institutional retirement business with him—some $400 million in assets juicing some $2.5 million in revenue. At first, he said, his new model was to offer objective financial advice without products for a 1% advisory fee. The hope was that the owners of the plans would also ask him to help with their private wealth management as well. He started with 13 staffers.

The Sarbanes-Oxley Boom

The retirement industry went through a cataclysm after the scandals that engulfed Enron and WorldCom. After Arthur Andersen went down in flames and the dot-com bubble burst, financial reporting and fiduciary responsibility came under Congress’s microscope. Plans were suddenly getting sued a lot for not looking out for their participants as fiduciaries ought to under the 1974 ERISA law.

The resulting Sarbanes-Oxley Act of 2002 drew a bright line for plan sponsors, Miller says, telling them that if they weren’t fiduciaries, they had better hire one and be arm’s length from it. Plan sponsors at companies didn’t want that job, and the Captrusts of the world were there to mop up the business.

This change led to a cleansing in the industry, as traditional brokerages retreated, trying to create buffers through RIA partnerships. “The brokerage firms kind of got left behind,” Miller says, “because they do have conflicts, they’re not objective and wouldn’t be a fiduciary. So what you ended up with were a lot of independent RIA firms that started winning the business.”

The result: The demand for companies offering niche retirement plan advice rose while the supply of providers sank.

“We had an average plan size of I think it was less than $4 million” before that, says Miller. “And we got pulled way up market because there weren’t that many people doing what we were doing. This kind of cemented the industry. I think the industry was really born coming out of Sarbanes-Oxley. … Now our average plan size is over $100 million.”

Dick Darian, a veteran DC plan consultant and now CEO with the Wise Rhino Group, says that the 401(k) space is a crowded vertical with different kinds of companies trying to compete. The companies like Mercer and Aon Hewitt have traditionally served the top half of the $8 trillion DC universe—i.e., Fortune 500 companies—while a cottage industry has served everyone else in the bottom half. But there are also still insurance/employee benefit firms around like NFP, Gallagher and Lockton and some record-keepers in the mix as well—all of them at war to own the 401(k) participant experience. The Mercers of the world, meanwhile, are coming down market while the Captrusts of the world are moving uptown, Darian says.