Price pressure is on 401(k) recordkeepers as a result of commoditized services, the government's focus on fees, and a slowdown in turnover among plan sponsors. With margins already thin, consolidation is inevitable - witness the sale of CitiStreet to ING and the acquisition of Hewitt by Aon. Advisers need to be keenly aware of which recordkeepers might be selling or exiting the business so they are not placing their clients in jeopardy. Though it is difficult to know, there are a few key indicators that can give advisers a clue into which providers may be at risk and which are likely to survive.

The June 2010 401kExchange Opportunity Indices highlight recordkeepers' dilemma: Fewer than 2% of plans indicated a likelihood they will make a change, down from a high of almost 10% in 2005. Plan sponsors have determined that it is more effective and less work to change advisers - highlighted by the almost 13% of plans that are looking to change their adviser, an all-time high.

The decline in plan sponsors' appetite for changing recordkeepers has dropped at a steady rate, not in spikes, which makes it likely that we will not see a dramatic increase any time soon. Meanwhile, many of the larger, more established recordkeepers are having a record year, which means the rich keep getting richer while the rest are suffering.

So picking the winners among the 40 or so largest national recordkeepers becomes even more important. Here are some things to look for:

* Participants and assets under management. The more the better, obviously, because these factors generate revenue which usually - but not always - leads to profits. The number of plans is much less important. (Sometimes more is not better.) More important is the average account balance.

* Revenue and profit. Not many recordkeepers break out or disclose this information. Even if they do, how can you trust the numbers unless they are audited?

* Growth. Is the provider growing more than the market average? Don't be fooled by increases in assets due to market growth.

* Business growth. Are they hiring or firing? Sales people are the last to go, so a decline in sales forces is not a good sign (although it's not necessary terrible either). Ask how much the provider is spending on technology, which is crucial to keeping up services and helps reduce costs in a deflationary market.

* Pricing. If a recordkeeper's prices are much higher or lower than their competition, there could be serious issues.

* Strategy. Is the 401(k) business important to the overall corporate strategy? Asset managers like the 401(k) record keeping business because it flows funds, but even managers like MFS decided to sell their record keeping division. Schwab's focus on capturing rollovers, for example, means they are less likely to exit.

* Senior management. There are three factors to consider: experience in the industry, talent level and tenure. Changing management every three or four years never allows a strategy to take hold.

* Wholesalers. If your wholesaler is good, meaning in the top quartile in sales within their organizations, and either stops aggressively selling to you or leaves the company, chance are that something is wrong.

The bottom line is that three years from now, there will be significantly fewer national recordkeepers. Advisers who can steer their clients clear of the recordkeepers left without a seat in this game of musical chairs will be much appreciated and will avoid the headaches of having to go through painful and time-consuming transitions.

Barstein is the president of 401k Exchange. Reach him at fbarstein@401kexchange.com.