How Many Plans Make You a DC Specialist?

Cogent Reports finds defined contribution (DC) plan advisers are managing fewer plans, on average, but the asset size of those plans is trending higher.

According to the firm’s new “About Retirement Plan Advisor Trends” report, this underlying shift is impacting the types of support advisers are seeking from recordkeepers and other service providers.

Similar to the results of the 2018 PLANADVISER Retirement Plan Adviser Survey, Cogent Reports finds “best-in-class plan adviser 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, the report says.

Cogent Reports says advisers, responding to this fact, are increasingly concentrating their DC business with a few select firms.

“When DC advisers are asked to prioritize specific aspects within plan adviser service and support, the availability of open architecture, fiduciary support and problem resolution rank highest,” explains Sonia Sharigian, report author and product director for Market Strategies-Morpace, which runs the Cogent Reports project. “Adviser website and online capabilities along with wholesaler support also play an influential role.”

Regular readers may be surprised to learn that, according to the study, plan advisers today manage a median of five DC plans, compared with seven plans reported in 2016 and 2017. The research suggest the pace of plan acquisition appears to be slowing, with DC advisers 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 $25 million in DC assets under advisement,” Sharigian says. “DC advisers managing $50 million or more 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.”

According to Sharigian, with the number of advisers managing less than $25 million in DC assets retreating and the books of business among those managing $50 million in DC assets growing, the industry is definitely seeing a shift in DC adviser expectations.

“For example, fiduciary support is becoming more important while having plan provider personnel to assist with on-site participant meetings is less critical,” says Linda York, senior vice president at Market Strategies-Morpace. “DC advisers see themselves as the quarterback of the team. They’re gravitating toward providers that support but don’t overshadow their critical role.”