60% of defined contribution assets are intermediated: Cerulli

The stickiness of DC assets is often cited as the primary reason why asset managers find the DC market attractive

September 23, 2013 9:53 IST | India Infoline News Service
New research from Cerulli Associates, a Boston-based global analytics firm, finds two-thirds of private defined contribution (DC) assets are invested in plans that have an ongoing advisor/consultant relationship, and that dedicated defined contribution investment-only (DCIO) wholesalers are a key to success.

"The stickiness of DC assets is often cited as the primary reason why asset managers find the DC market attractive," Kevin Chisholm, associate director at Cerulli reveals. "Plan participants very rarely change their asset allocation, and asset managers are likely able to retain DC assets and benefit from ongoing contributions."

"We have found that advisors and consultants increasingly are making the investment decisions that determine which firms have the opportunity to manage DC assets," Chisholm explains.

"Asset managers know the consultant community well, but retirement specialist advisors are a unique group that combines elements of both retail advisors and institutional consultants. Understanding these advisors and their practices is essential to determining how DC sponsors make decisions."

The third quarter 2013 issue of the The Cerulli Edge-Retirement Edition takes a close look at the DCIO landscape and the important role of sales organizations and retirement specialist advisors.

"The growth of retirement specialist advisors ultimately led to the birth of the DCIO wholesaler, which has shifted from a unique advantage to a necessity to keep pace in the increasingly competitive DC market," Chisholm continues.

"Asset managers need to have a dedicated salesforce in place to make sure advisors know about their product offerings."

Cerulli emphasizes the importance of asset managers developing relationships with and positioning funds for use in DC plans with intermediaries. It is becoming more challenging to win and retain DC assets, and understanding the competitive landscape is crucial in identifying opportunities.

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