Asset managers’ approach to DC plan advisors needs a rethink

Retirement plan advisors who are ‘dabblers’ and ‘nonproducers’ need more than siloed coverage, Cerulli says.

As the retirement plan space slowly but surely piques the interest of broker-dealers, asset managers have to revamp their strategies to work with advisors who focus on defined-contribution plans, according to new research from Cerulli.

Within the world of retirement plan advice, Cerulli says a significant proportion of advisors are either “dabblers” – advisors whose work with retirement plans represents 15 per cent to 49 per cent of their assets under administration – or “nonproducers,” who have less than 15 per cent of their AUA in retirement plans.

In addition to representing the majority of retirement plan advisors at broker-dealer firms, Cerulli says dabblers and nonproducers account for a meaningful portion of broker-dealer advisor-sold assets within defined-contribution plans.

Some dabblers have a genuine interest in growing their DC book of business, but the research firm says asset managers are falling short in their efforts to cover those advisors.

“[S]ome asset managers say their firm still employs a siloed approach to covering these advisors, with little communication between retail and DCIO wholesaler teams,” Shawn O’Brien, director at Cerulli, said in a statement.

Tellingly, 44 per cent of dabblers and nonproducers said they’d be keener to pursue DC plans as an opportunity if only they had more support in cultivating wealth management clients from their DC business.

Another 41 per cent said they’d be more incentivized to chase after DC plan business if they got help with sourcing new DC plan sponsor clients.

To address these advisors, Cerulli urges asset managers’ distribution teams to adopt a collaborative coverage approach. On top of that, it encourages wholesaler teams to go beyond the typical talking points of product information and capital markets commentary – by providing better sales tools for advisors to improve and grow their DC planning practices, for example.

“B-D-based advisors lean on asset managers for nonproduct-related tools, education, and strategic guidance that help them better serve their clients and grow their book of business,” O’Brien said. “By helping advisors improve and grow their practices, asset managers win advisors’ loyalty and trust, positioning themselves as strategic partners and laying the foundation for long-term, reciprocal relationships.”