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
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.