DC Plan Advisors Driving Financial Wellness Program Adoption

Fact-Based Trends from Cogent Reports™    

Faced with increased pressure to demonstrate added value, DC advisors are offering financial wellness programs more frequently. Financial wellness programs, which are designed to educate employees about how to manage their personal finance challenges such as debt reduction, asset management, unexpected expenses as well as saving for retirement, are starting to soar in popularity.

Nearly four in ten (38%) DC advisors incorporate financial wellness into their offerings, a significant increase from the 29% who reported doing so in 2016. Emerging DC advisors (managing less than $10M in DC assets) and Independent producers are driving the overall increase in financial wellness program availability.

Financial Wellness Program Availability | Cogent Reports

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Custom Target Date Fund Recommendations on the Rise

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A growing number of DC specialists—financial advisors managing at least $50 million in DC assets—are now recommending customized funds to their plan sponsor clients, further signaling a potential shift in the target date fund marketplace. In fact, this segment’s customized fund recommendations have increased significantly from 5% in 2015 to 15% in 2016.

What’s more, nearly half of DC specialists (46%) continue to advocate using an external manager for target date funds rather than the proprietary target date funds offered by the current plan recordkeeper. This is further evidence that incumbent recordkeepers must continue to up their game in this increasingly competitive marketplace.

At the individual brand level, DC specialists are equally likely to tap American Funds and Vanguard as their target date fund provider, while American Funds enjoys a stronger advantage across all other DC AUM segments. Emerging DC advisors—financial advisors managing under $10 million in DC assets—also gravitate to Vanguard, Fidelity, T. Rowe and BlackRock when recommending target date fund providers to clients. Continue reading

DOL Fiduciary Ruling Prompting DC Advisors to Shift Focus

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DC Advisors Admit Focusing More on Compliance, Less on Adding Client Value as a Result of DOL Fiduciary Ruling

As previously predicted, an overwhelming 73% of financial advisors agree that the DOL fiduciary ruling is driving the industry toward a fee-based compensation structure, causing a significant amount of anxiety among advisors, and DC advisors are no exception. As a result, many DC advisors are altering their approach to rollover/distribution advice and are spending more time thinking about compliance than about adding value for their clients.

Emerging DC advisors (advisors managing less than $10M in DC assets) are more likely than Established DC advisors (managing $10M+ in DC assets) to succumb to knee-jerk emotions arising from the threat of lawsuits and broker checks and blemishes on the overall industry reputation. This could be a result of more limited resources within their advisory firms to deal with these potential costs. Continue reading

Bridging the Great Divide between Retail and DC

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Bridging the Great Divide

For many investment managers, growth comes easier in the retail market than in the DCIO space. And for good reason. DC plan advisors report working with half the number of investment managers they utilize with clients in their retail businesses—an average of 4.7 firms in the DC market compared with 10.9 firms in the retail market. However, firms that manage to secure relationships with a DC plan advisor are reaping the benefits as these producers are much more loyal to the fewer investment managers they utilize.

The average NPS® score for DC investment managers among DC producers is 42 compared with an industry average of -9 for mutual fund providers in the retail market. Continue reading

What DC Plan Providers Need to Know

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DC Plan Fees Webinar_CoverDC plan fees are under intense scrutiny and can be a defining factor in winning or losing business. How do plan providers and investment managers turn this new focus on fees into an advantage? This is what I aimed to answer during our most recent Cogent Reports™ live webinar, Turning the Focus on DC Plan Fees to Your Advantage (watch a replay here).

In highlighting findings from our recently released Retirement Planscape® and Retirement Plan Advisor Trends™ reports, some of the DC professionals who joined us had some insightful questions that we feel are worth sharing:

1. What are some of the areas that DC plan providers can differentiate their business? What are some of the areas that are missing among plan participant services?

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DC Plans: How to Catch the Silver Bullet

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You don’t have to be superman to catch a silver bullet, but to gain a more direct line to DC plan participants, providers need to deliver the right information to the right audiences. Plan sponsors can often play the role of a gatekeeper between plan participants and plan providers, so gaining access to plan participants means making significant and solid inroads with plan sponsors. A lot is at stake for plan sponsors—their job and reputation as well as the financial well-being of their participants are all factors in plan sponsors’ hesitance to give plan providers direct access to their participants.

But, what about when participants want help from the plan provider? Many plan sponsors feel responsible to be all things to all people—provider, advisor and teacher. Financial providers who want more direct access to participants and have their sights set on opening the door to cross-selling opportunities need to establish trust by providing education and enlisting the help of retirement plan advisors, who have significant influence on the attitudes and behaviors of plan sponsors and participants alike. Continue reading