As the federal and state governments, as well as the press and corporate America, view DC plans as the primary savings and retirement vehicle for most workers and their families, the DC industry is entering its next phase.
Though still relatively early, the stakes are higher for providers and advisors focused on retirement. Only the really serious ones with intellectual, financial and physical capital will be able to make an impact — a dynamic that highlights our mid-year 2015 DC Consolidation Report, available as an interactive list below and also in PDF format.
The deals done since 2014 highlight the fact that only record keepers that serve the $1 million-$250 million DC market with significant assets and deep pockets have any hope of surviving. Long-only active equity DCIOs without a viable TDF strategy (meaning most of them) face a shrinking pool of assets. BDs that have thus far hid their head in the sand about servicing advisors that work with DC plans are now facing an uncomfortable reality, with the DOL fiduciary rule affecting not just corporate plans but also IRAs. And the 25,000 advisors with more than $25 million in assets have a whole new set of options to consider.
Fintech companies are starting to eye the DC market, while PE and hedge funds jealousy eye a $25 trillion and growing pool of assets. For those that can actually reach participants via employers, the reality is not that farfetched — think Google or Facebook. And while alternative managers are unlikely to go direct to plans, participants or even advisors, they might be interested in partnering with asset allocators that do.
Will consolidation rather than expansion continue? Most likely, but the financial service industry in general, and retirement planning specifically, seems far too attractive for outsiders to ignore as technology breaks down the traditional barriers and obviates the need for capital-intensive technology and distribution — as traditional television and now cable providers are realizing. Did you ever think that you would access TV programming through your phone company or via the Internet where or when you want?
[table id=2 /]