Practice Management

DC Advisers Cite Fewer Go To Providers

Advisers recommend an average of just 2.2 plan providers to prospective clients, a new report suggests. 

By John Manganaro editors@strategic-i.com | November 30, 2016

Defined contribution (DC) specialist financial advisers have trimmed down their set of go-to providers, according to the latest Cogent Reports study from Market Strategies International.

According to the study, “Retirement Plan Advisor Trends,” DC specialists are recommending an average of just 2.2 plan platform providers to prospective clients. In fact, 39% of DC advisers recommend only one plan provider for clients to consider, significantly higher than the 32% reported in 2015.

This has increased the competitive pressure on DC recordkeepers, the report argues, while putting the onus on advisers to closely monitor these trusted recordkeeping partners.

“With nearly four in 10 DC advisers recommending just one provider, achieving that coveted spot on advisers’ recommended list has never been more daunting [for recordkeepers],” the report explains. “As such, knowing which consideration drivers to leverage and understanding DC advisers’ brand perceptions have never been more vital.”

Sonia Sharigian, senior product manager at Market Strategies and author of the report, further observes that advisers work with an average of just 2.6 plan providers across all of their DC business—with indications that the figure may fall further.

According to the study, among established DC producers managing at least $10 million in DC assets, the top two brand consideration drivers are “easy to do business with” and “value for the money.” Interestingly, these both mirror the top factors reported among DC plan sponsors earlier this year.

“The fact that these consideration drivers are similar across both audiences is a testament to the level of influence retirement plan adviser recommendations have in the DC market,” adds Linda York, senior vice president at Market Strategies. “Notably, only a handful of providers including American Funds, Fidelity, Vanguard and John Hancock are strongly associated with these key attributes. Challenger brands need to find another niche if they hope to break the hold of these dominant market leaders.”

More information on the Cogent Reports series of research from Market Strategies International is available here