DC plan advisors are managing fewer plans, on average, but the asset size of those plans is trending higher. This underlying shift is impacting the types of support advisors are seeking from plan providers. In fact, best-in-class plan advisor service and support is now a top brand consideration driver for DC plan providers. However, only a handful of DC plan providers earn strong brand associations for this important attribute, which helps explain why advisors are concentrating their DC business with a few select firms. These and other findings are included in Retirement Plan Advisor Trends™, an annual Cogent Reports™ study by Market Strategies International-Morpace.
“When DC advisors are asked to prioritize specific aspects within plan advisor service and support, the availability of open architecture, fiduciary support and problem resolution rank highest. Advisor website and online capabilities along with wholesaler support also play an influential role,” said Sonia Sharigian, product director in the syndicated research division at Market Strategies-Morpace and author of the report. “DC plan providers that demonstrate proficiency in these key areas will be best positioned for new business growth.”
According to the study, plan advisors manage a median of five DC plans compared with seven plans reported in 2016 and 2017. Moreover, the pace of new-plan acquisition appears to be slowing, with DC advisors adding an average of 1.6 new plans over the past year compared with 2.1 a year ago. This contraction stems largely from producers with less than $25M in DC AUM. Meanwhile, DC advisors managing $50M+ in DC assets boast books of business of 20 plans or more and are continuing to build their DC practices by adding an average of 3.9 plans over the past year, more than double the overall average.
“With the number of advisors managing less than $25M in DC AUM retreating and the books of business among those managing $50M+ in DC assets growing, we are definitely seeing a shift in DC advisor expectations. For example, fiduciary support is becoming more important while having plan provider personnel to assist with on-site participant meetings is less critical,” added Linda York, senior vice president at Market Strategies-Morpace. “DC advisors see themselves as the quarterback of the team. They’re gravitating toward providers that support but don’t overshadow their critical role.”
When looking at the broader suite of best-in-class advisor service and support, five firms emerge as leaders; however, in the shifting landscape there remains vast opportunity for other providers to seize momentum.
Among Advisors managing $10M+ in DC AUM)
1. American Funds
2. Fidelity Investments
3. John Hancock Retirement Plan Services
4. Principal Financial Group
5. Empower Retirement
Cogent Reports conducted an online survey of a representative cross section of 521 plan advisors in August 2018. Survey participants are required to have an active book of business of at least $5 million and be actively managing DC plans. Strict quotas are set during the data collection period, and post-fielding statistical weighting (where necessary) is applied. The data have a margin of error of ±4.29% at the 95% confidence level. Market Strategies will supply the exact wording of any survey question upon request.
Click below for more information on the report.