According to research by Financial Advisor magazine, more advisors will focus on retirement planning for their clients — and a significant percentage of them will leverage corporate relationships to access those clients. Of the 1,700 advisors in the survey:
• 67% plan to increase the number of clients they advise on retirement
• 69% see corporate retirement plans offering a significant opportunity to increase profit
• 55% of the advisors indicated that they spend less than 25% of their time working with plan sponsors
To help these advisors, providers of investment advice and analytical tools and service are stepping up to meet the demand.
There are an estimated 5,000 advisors (a number that’s growing) that have $30 million of DC assets, 10 plans and 3 years of experience, according to research by TRAU. Yet the demand from the 600,000-plus DC plans with more than $250,000 in assets is growing, and for a number of reasons. For one thing, more traditionally direct providers like Fidelity and Vanguard are now focusing on distributing through advisors. For another, plan sponsors realize that their participants need help.
While those 5,000 elite advisors who focus more than 25% of their time on the corporate retirement market should grow to 10,000 over the next 5 years, there are tens of thousands of “intentional advisors” who, while not interested in focusing on DC plans, intend to use them as a strategy to reach potential clients.
Meanwhile, more tools are being created to help advisors provide education and advice to help these plan advisors. An at the same time, the estimated 130 online advice providers launched since 2008 are targeting Gen X/Y investors. Clearly, retirement in general, and DC plans specifically, will become a more heated battleground and a prime market for more advisors and online providers — including more traditional players like Morningstar and Financial Engines.
