October 2014, Boston. New research from global analytics firm Cerulli Associates finds that advisors controlled 28% of the defined contribution (DC) market at year-end 2013.
"The retirement industry, in particular defined contribution, experienced regulatory scrutiny coming out of the market crisis. The market downturn highlighted the role of the DC plan and its placement of defined benefit (DB) as the primary retirement savings vehicle for the vast majority of Americans," states Bing Waldert, director at Cerulli. "Given the heightened scrutiny of retirement plans, a class of advisors and consultants who specialize in retirement plans and employee benefits has risen in prominence."
Cerulli's October 2014 issue of The Cerulli Edge – U.S. Edition explores the topic of money in motion, analyzing investor switching behavior, advisor movement, and defined contribution investment-only (DCIO) growth.
"For asset managers that seek placement in and flows from DC plans, understanding and targeting these specialist advisors has become the cornerstone of their DCIO strategy," Waldert explains. "However, this class of advisor remains ill-defined, as they may practice in other business models dedicated to wealth management or employee benefits."
Asset managers focused on the DCIO space use a variety of measures to identify the specialist advisor, including assets under management, revenue, marketing efforts, and time allocation. These specialists believe they sell a process and a business model, rather than a product.