Can Dabblers Exist in the DC Market?

Can dabblers survive in today's complicated DC world? While many experts think that advisors must specialize to do well in the 401(k) and related retirement plan markets, there’s a lot of evidence that many advisors with plans under management do not specialize, nor do they intend to. 

Cerulli estimates that only 8% of all advisors specialize, but that’s still 24,000 advisors. And Aite Group states that 50% of all advisors have 10 or more plans, according to an article in Financial Advisor IQ. There’s no doubt that the proposed DOL fiduciary rule would make it harder for dabblers, many of whom will need to be fiduciaries, while disclosure regs have helped to lower fees. But does that mean advisors need to specialize?

It may be self-serving for specialty firms to aver that there is no room for dabblers in the DC market. That might be true for mid-size and larger plans, but there’s clear evidence that many advisors use DC plans to develop relationships with the company and their employees to cross-sell other services. 

Some purists believe that there’s an inherent conflict for an ERISA fiduciary to sell, for example, wealth management services to the company’s executives, but it’s done all the time. One national insurance broker dealer claims that 90% of all their reps get paid on a DC plan, while new research is showing that many more advisors are working in this market.

It might be true that there is no room for dabblers in the larger market. And claiming that there is no room for dabblers at all may serve specialist firms well — especially ones that market to generalist advisors. But with the growing importance of retirement in general and 401(k) plans specifically, advisors that dabble using DC plans as a tool to sell other services seem to be thriving.