What DC Plan Advisors Want

It's hard to read the minds of the financial advisors who specialize in DC plans, but that's sort of what DCIO wholesalers must do to serve their most vital audience. That's because even as the DCIO (Defined Contribution, Investment Only) business grows more competitive, specialist plan advisors have amassed even greater distribution clout.

Unfortunately, many DCIO shops still fail to engage these intermediaries effectively. Only 39% of the elite plan advisors we surveyed feel that asset managers “usually” understand their business. Still, these elite plan advisors want interaction with DCIO wholesalers, and typically depend on a half dozen “trusted” asset manager sales reps ─ according to findings in the new Ignites Research report, What DC Plan Advisors Want.

A better grasp of DC plan advisors’ goals starts with recognizing the variety of advisors in this market. And although seven of the 10 DCIO firms that plan advisors ranked as best in overall wholesaling are large, size isn’t everything. Midsize and small DCIO managers can still find an edge by providing relevant value-add programs and addressing advisors’ needs.

Value-add programs and content continue to be reliable sources of support for plan advisors. We surveyed the Financial Times Top 401 Plan Advisors, a select group of DC plan advisors from across the U.S. with a median of $525 million in DC plan assets under advisement, and the FT 401 say the types of value-add pieces they use most are those geared toward plan participants addressing topics such as contribution rates. A total of 67% of FT 401 advisors report using such content with 24% intending to use them more.

The second most popular type of content with FT 401 advisors is intelligence on regulatory, legal and legislative issues. Sixty-four percent of advisors report using such materials. Support for plan design and tools to assess DC plans are the third most frequently used type of value add (used by 62% of advisors). In general, the most-used categories of value add are those that help advisors look good in front of their clients and prospects.

Anticipating and responding to advisors’ preferences includes understanding their business model well enough to navigate the nuances that differentiate, for example, plan advisors at wirehouses versus advisors at so-called “mid-tier consultants,” firms such as Captrust, SageView and Pensionmark, which sit between national consultants and typical plan advisors. These mid-tier consultants in particular demand a distinctive approach, with subtle differences in support and product needs.

What DC Plan Advisors Want looks at what organizational support and resources help make DCIO firms more valuable to plan advisors. In doing so, it addresses questions such as whether DCIO wholesalers are spending their time on the correct audiences and activities, and what DC plan advisors genuinely appreciate. The report is based on surveys of 248 of the FT 401 specialist plan advisors, 22 experienced DCIO wholesalers, and interviews with several DCIO sales leaders.

Ignites readers can click on the link to access the 26-page report; you can read it online or download a PDF (and you can even download the data underlying the charts and graphs).

Interested in more insights? Join the Ignites Research Group on LinkedIn.