An increasing number of DC plan advisors are recommending TDFs that are not managed by the incumbent record keeper, according to Cogent’s just-published “Retirement Plan Advisor Trends” report.
Overall, 47% of advisors surveyed recommended non-proprietary TDFs, up from 32% two years ago; 59% of advisors with more than $50 million in DC AUM are also recommending TDFs not managed by the record keeper, compared with 37% in 2013. About one in four (41%) of advisors recommended a target date or lifecycle fund for their clients’ QDIA.
Though more advisors are recommending index funds to their DC clients, active management is still the number one recommended strategy used by 98% of advisors; 73% are recommending passive strategies and just 1% are using CITs.
According to Cogent VP Linda York, other highlights from the report include:
- The median number of plans among advisors surveyed was six, which they expect to grow to 10 in 2016; advisors with more than $50 million DC AUM have 16 plans, which is expected to increase to 19 next year.
- 10% of more experienced advisors have changed their comp structure as a result of the 2012 DOL fee disclosure regs.
- 81% of advisors work on IRA rollovers or help terminated participants when they leave the plan.
- One-on-one advice is being provided by 82% of advisors.
- Relationships with record keepers are stable, with experienced advisors working with an average of 4.2 plans — a ratio that has not changed in the last two years.
The responses of nearly 500 advisors that were actively managing defined contribution plans were reflected in the findings in Cogent’s “Retirement Plan Advisor Trends” report. Cogent is part of Market Strategies International.
According to Cogent data, the top 10 recommended TDF providers by DC Specialists ($50M+ in DC AUM) are:
1. Vanguard
2. Fidelity Investments
3. American Funds
4. BlackRock
5. T. Rowe Price
6. J.P. Morgan Asset Management
7. John Hancock Funds
8. American Century
9. Schwab Funds
10. Principal Funds
