DC Plan Advisors Are Leveling Up

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The defined contribution (DC) plan market is increasingly dynamic with a variety of industry forces and innovations at play, and so, too, is the makeup of the DC advisor population. Findings from our newly released Retirement Plan Advisor Trends™ report reveal important changes in the profile of financial advisors who are active in the DC space, affecting the business relationships these advisors have with plan providers and investment managers.

On the surface, the DC advisor population looks stable, with two-thirds of financial advisors (65%) continuing to oversee DC plan assets. However, DC “dabblers” appear to be backing away from the complexities of servicing the DC market. Today more than nine in ten (93%) Emerging DC advisors—those managing less than $10M in DC assets—report less than one-quarter of their total AUM is comprised of DC business: a significantly greater proportion than in 2016 (88%) and 2017 (86%).

While Emerging DC advisors are pulling back, a growing number of RIAs are actively competing for business in the DC plan market. Nearly one in five RIAs (19%) is now classified as an Established DC advisor—managing $10M or more in DC plan assets—up significantly from 13% in 2016 and 14% in 2017.

Moreover, RIAs and Independent producers are now equally dependent on DC compensation, with both channels reporting 21% of their respective earnings stemming from DC account activity. In comparison, the average plan advisor estimates that just 18% of his or her compensation is generated by DC plans.

Another key finding: the number of DC plans being managed is decreasing, suggesting that DC advisors are dedicating more time to servicing their existing plans. This year, plan advisors are managing a median of five DC plans compared with seven reported in 2016 and 2017. This shift stems largely from producers with less than $25M in DC AUM, including the DC dabblers who are scaling back their involvement.

While plan advisors are managing fewer plans on average, the size of the plans being managed is trending higher. Furthermore, DC specialists (advisors managing $50M+ in DC assets) report the greatest new-account activity, adding an average of 3.9 plans, more than double the overall average of 1.6 new plans. So while the “dabblers” are retreating, the specialists are growing. This increasing specialization is impacting the types of support that advisors require from plan providers. For example, DC advisors are now placing more emphasis on fiduciary support programs while expressing less need for plan provider personnel for onsite participant education meetings. As DC advisors “level up” their DC business, plan providers and investment managers need to adapt to the intensifying sophistication of this critical distribution channel.


For more on what’s covered in the full Retirement Plan Advisor Trends report, review an overview.


This entry was posted in Brand and Messaging, Financial Services and tagged by Sonia Sharigian. Bookmark the permalink.
Sonia Sharigian

About Sonia Sharigian

Sonia is a product director for Cogent Reports with more than 10 years of experience in journalism, marketing and research. She has managed numerous qualitative and quantitative studies in financial services industry research, as well as the hospitality, consumer packaged goods and retail sectors. Prior to Market Strategies, Sonia served as a community manager for Communispace Corporation, where she helped major brands generate game-changing insights via online communities. She also worked as a public relations specialist for Putnam Investments and as a staff reporter for Community Newspaper Company. Sonia earned an MBA from Boston University School of Management and a bachelor’s degree in communications from Simmons College. She is an ardent Patriots fan who recently became hooked on sprint triathlons.

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