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External forces confronting the 401(k) industry including the Department of Labor fiduciary rule, provider consolidation due to pricing pressure, and the heavy volume of litigation over excessive fees continue to push defined contribution (DC) plan sponsors to hone in on cost reduction and reevaluate expenses related to all aspects of plan administration and investments.
As such, acquiring new business in the DC market can be arduous, involving multiple influencers and decision-makers. Asset managers and plan providers often struggle to find the right combination of outreach to the various parties involved and, as a result, waste valuable time and resources. With those dynamics in mind, we are excited to kick off a qualitative research effort designed to better understand the process of evaluating and selecting DC plan providers and investment managers from three critical perspectives:
- DC plan sponsors, those likely to switch plan providers and/or DC investment managers
- Heavy DC advisors, DC specialists managing $50M+ in DC AUM
- DC consultants, consultants focused heavily on serving the DC market
DC Market 360° will examine the evaluation and selection process from each viewpoint using a variety of innovative techniques including online bulletin boards, virtual ethnographies and one-on-one interviews to obtain in-depth color and insights. We’ll explore:
- Triggers for switching: What factors lead DC plan sponsors to want to switch providers/managers? What prompted DC plan sponsors to get into that mindset? What are the warning signs? How influential are DC advisors and consultants in evaluating providers/managers with clients? What would cause them to stop recommending specific firms?
- Critical stages and factors during the RFP process: What are the must-have consideration drivers that firms need to demonstrate? Who makes the ultimate decision? What qualities are go-to providers demonstrating to stay on recommended lists? How do consultants or advisors justify a provider/manager with higher fees?
- Targeted marketing and service capabilities: Beyond consultant and advisor recommendations, where are DC plan sponsors getting their information from? What websites, third-party sources and rankings are they using? What types of data and information are missing from the process? How influential are financial wellness programs, participant education and websites/tools?
By honing in on these critical evaluation and selection processes, we’ll be able to pinpoint what makes DC plan providers and investment managers stand out and be able to ascertain varying brand preferences based on company size, number of employees and industry. This important research will equip firms competing in the DC market with unique knowledge of the levers to pull and facets to leverage to maximize their potential of winning new business for years to come.
Click below to learn more about the full report.