Cerulli Identifies Niche Retirement Market Opportunities

The report, “The Cerulli Edge: Retirement Edition,” says 401(k), 403(b), public and private defined contribution and defined benefit plans, and traditional and Roth IRA plans get the most attention since they are responsible for $14 trillion in 2010, there are burgeoning areas of growth and asset-gathering potential for firms willing to look beyond the crowded mainstream retirement markets.  

The six niche opportunities examined in Cerulli’s research include: 

• Taft-Hartley Plans: In an effort to improve their funded ratios, these plans are primed to increase their allocation to international investments as they seek to improve performance. 
• Nonqualified Deferred Compensation Plans (NQDCP): As economic conditions improve, hiring activity will lead employers to consider enhancements to benefit plans, such as adding a NQDCP, in order to gain an edge in the competition for talent.  
• 457 Plans: While-asset gathering opportunity is limited and specific, firms that are able to offer a 403(b) plan together with a 457 plan are poised to win assets as this combination allows for the creation of higher balance accounts. 
• 412i Plans: The asset manager opportunity is limited due to requirements related to the funding vehicles used in these plans. There are opportunities, however, for B/Ds and insurance companies because plans are attractive to small, but very profitable businesses, typically characterized by highly compensated, late-career professionals with significant assets. 
• Small Business IRAs: With 70% of small business owners not saving for retirement in any vehicle, these plans provide the solution, and thus can’t be ignored by firms seeking asset-gathering opportunities.  
• Solo 401(k) plans: Current growth is positive for these plans and may be augmented by Baby Boomers who, working past retirement age, may see the flexibility of a sole-proprietorship arrangement, and desire to continue to save for retirement through this familiar vehicle.  

The report is available for purchase from Cerulli.