Advisors, wake up! The defined contribution industry lacks a universal understanding of what a retirement plan advisor is. What’s at stake? Only $1.3 trillion in assets.
That’s the strong message from new research from global analytics firm Cerulli Associates, which finds nearly half of the $1.3 trillion advisor-sold DC market is controlled by retirement specialists.
“The influence of advisors in the DC market is significant and growing as evidenced by the consistent year-over-year rise in advisor-sold assets,” Jessica Sclafani, associate director at Cerulli, said in a statement.
The report, titled Defined Contribution Distribution 2015: Addressing Specialist Advisors in the Small and Mid-Sized Plan Segments, focuses on small and mid-sized plan segments of the defined contribution market, and includes analysis of recent developments and opportunities in DC plan asset management and distribution. The report also addresses the influential retirement specialist advisor population that sells and services these plans.
“Across dozens of research interviews with senior executives in the DC industry, the retirement specialist advisor was almost unanimously identified as the primary sales target relative to the small and mid-sized plan markets,” Sclafani explains. “When Cerulli analysts pressed for a definition of this advisor, however, it became clear the DC industry lacks a universal understanding.”
Cerulli defines retirement specialist as an advisor who generates a minimum of 50% of total revenue from retirement plans. Some DCIO firms are focusing on identifying the next generation of retirement specialist advisors or the “emerging retirement specialist.”
Cerulli recommends that all DC providers and asset managers, even those that are satisfied with their current retirement specialist presence, build a strategy to identify, engage, and nurture the emerging retirement specialist advisor.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
