Personalized Participant Investment Experience and Data Integration Are Top Priorities for Advisers

Allowing flexibility in income distribution, adding retirement education/tools and communicating the value of staying in plan were among the most popular consultant recommendations for plans seeking to hold onto retiree assets, according to the 16th Annual Defined Contribution Consulting Study conducted by PIMCO.

“A generational shift in how Americans plan for retirement is creating demand for a more dynamic approach to saving and technological advances have made solutions tailored to plan participants specific circumstances much more accessible to the broader public,” said Rene Martel, managing director and head of retirement at PIMCO, in a statement.

While most prefer to retain retiree assets in the retirement plan, consultants and advisers diverge on recommended retirement income solutions. Institutional consultants prefer target-date funds with regular level payout, whereas aggregators prefer managed accounts, the survey found. Both groups recommended that in order to retain retiree assets in the plan, plan sponsors need to allow distribution flexibility and offer investments and services that support retiree spending needs.

Eighty percent of advisers and 65% of institutional consultants recommended a personalized experience to encourage retirees to stay in plan. For consultants, the survey found, the top priority is to expand custom investment solutions capability; a custom target-date fund format is the first recommendation for larger plans. For advisers, the most important adviser managed account features include “personalized investment experience for the participant” and “participant data integration technology,” PIMCO reported.

Both groups surveyed agreed that their clients’ priorities were reviewing target-date funds and retirement income solutions and evaluating environmental, social and governance options, PIMCO found. When selecting a TDF, the glidepath and fees remain the top leading factors under consideration, according to the survey. Regarding ESG, a significant majority of consultants, 83%, said they consider it when selecting investment options, while 40% said that evaluating and/or adding ESG options is among their clients’ top priorities.

Consultants’ and advisers’ business development priorities differed, the survey results show. Consultants focused on enhancing their firms’ outsourced CIO capabilities and expanding custom investment solutions capabilities. Advisers focused on acquisition or mergers with other firms. Additionally, consultants stated retirement income product evaluation services grew the most over the last year, while advisers said financial wellness services grew the most, PIMCO reported.

PIMCO surveyed 36 consultants and advisory firms, which collectively serve more than 37,000 clients with $6.9 trillion in total assets in defined contribution retirement plans. Published results were based on responses from firms with more than $10 billion in DC assets under management. Survey responses were collected between January 4 and March 7.