Practice Management

Opportunities Exist for Recordkeepers to Maintain and Gain Assets

However, the motivation for moving outside assets or DC plan assets to the provider varies, so recordkeepers should tailor their communications to different groups.

By Rebecca Moore editors@assetinternational.com | February 16, 2017

Even though nearly four in 10 (38%) of defined contribution (DC) plan participants feel they don’t have enough assets outside their DC plan to warrant having an adviser, and more than one-quarter (28%) say they cannot afford a financial adviser, only 18% of current plan participants have entrusted their plan provider with outside assets.

According to a new Spectrem Group report, Advisor Usage Among DC Plan Participants, “In many cases, this is simply a matter of poor communication, as more than four out of ten (43 percent) plan participants would consider transferring outside assets to the provider if they were aware of the providers’ full range of asset management capabilities, fees, etc.”

As for keeping DC assets after participants leave a plan, 51% of plan participants whose plan provider currently manages a portion of their outside assets would consider moving their DC assets to an IRA with their provider.

The study found the motivation for moving outside assets or DC plan assets to the provider varies. Among women, the most important criteria for moving assets to their DC provider is a feeling of trust, security and safety. Among men, investment performance drives their decision making. Providers who tailor their communications to address these expectations are likely to have the greatest success retaining and gaining DC participants’ assets.

This report is based on a survey of 866 401(k), 403(b), and 457 plan participants who have a household net worth of at least $100,000.