As the DC market matures, a power struggle is emerging between record keepers and advisors. As the advisor world moves toward fee-based fiduciary plan advisors who are forming teams, some providers are adjusting. But others are stuck in a pre-Great Recession world — even as all signs are pointing toward a new world in which power is shifting from record keepers to advisors facilitated by DCIO firms.
In a feature article in the summer issue of NAPA Net the Magazine, editor in chief Fred Barstein paints a picture of a dramatically changing world in which workers, employers and the government are placing an ever-increasing importance on participant-directed corporate retirement plans.
Industry consolidation, fee compression and an emphasis on outcomes-based solutions are the principal drivers of the power shift, Barstein argues. “Who has the greatest impact on outcomes?” he asks. “Record keepers don’t really need advisors to design the ultimate auto-plan, with auto-enrollment at 6% escalating to over 10% using a stretch match and managed investments as the QDIA. But advisors can customize, educate, advise and get those numbers even higher.”
Barstein concludes that, “for those that are able to show increased DC Alpha, consolidation, price pressure and navigating the power shift will not be a problem — there will be opportunities to separate themselves. Until then, there will continue to be a somewhat cordial but combative dance among advisors, record keepers and broker dealers, with the DCIOs playing the music and the record keepers writing the lyrics — as long as they keep tight control over the data.”
Click here for a pdf of the feature article, “Rumble in the Jungle.” The entire 72-page summer issue of NAPA Net the Magazine is online here.
