Optimizing DCIO Value-Add Programs

Transcription

1 Optimizing DCIO Value-Add Programs What DCIO firms can do to make sure their value-add offerings are really adding value for DC plan advisors and how these managers can think about overall value-add strategy. October 2015 Ignites Research reports are sold on an individual or annual subscription basis. For pricing information, please contact Ben Northover at (212) or at

2 Table of Contents Executive Summary 3 Methodology 4 Key Takeaways From the Report 5 Chapter 1: Prioritizing Value Add for Plan Advisors 7 What Plan Advisors Really Want in Value Add 9 Chapter 2: Drivers of Value-Add Demand 13 Value Add for Advisors or for Clients 14 What Plan Sponsors Want 16 Chapter 3: Creating and Assessing DCIO Value-Add Programs 19 New vs. Old Value Add 21 Chapter 4: Which Firms Have the Best DCIO Value Add 24 Main Recommendations for Action From the Report 27 Table of Illustrations Figure 1: The 360-Degree View of DCIO Value Add 7 Figure 2: DCIO Firms Top Audiences for Value Add 8 Figure 3: FT 401 Advisors vs. DCIO Leaders on Most Prized Value Add 10 Figure 4: Pct. of Plan Advisors Intending to Increase Use of These Value Add Types 11 Figure 5: Top Challenges for FT 401 Plan Advisors Practices 13 Figure 6: Plan Advisors Preferred Intent of DCIO Value Add 14 Figure 7: Crucial Value Add to Advisors, Practice-Oriented vs. Client-Oriented 15 Figure 8: Sponsors Views on Most Critical Services Provided to DC Plans 16 Figure 9: Sponsor Preferences for Informational/Educational Support 17 Figure 10: Are DCIO Marketers Developing New Value Add 19 Figure 11: Number of Value-Add Programs Offered per DCIO Firm 20 Figure 12: Typical Time DCIO Firms Leave Value-Add Programs in Market 21 Figure 13: How Long Advisors Typically Use a Manager s Given Value Add 21 Figure 14: Most Important Success Factors for Retail DCIO Value Add 22 Figure 15: Top DCIO Firms for White Papers & Market Insights 24 Figure 16: Top DCIO Firms for Events & Fund Benchmarking 25 Figure 17: Top DCIO Firms for Product Updates & Practice Management 25 Figure 18: Top DCIO Firms in Value Add Overall 26

3 Executive Summary So-called value add programs have become central to retail defined contribution investment only (DCIO) distribution efforts, usually with programs that are distinct from the non-dc retail fund division. As competition for DCIO assets intensifies, value add is becoming more important as a tool to help distribute through specialist DC plan advisors. But DCIO teams aren t always maximizing their opportunities with value add. While DCIO organizations in general are prioritizing product-oriented value add, elite plan advisors rate retirement industry insights and fund reporting/benchmarking tools as the most helpful value-add programs. DCIO executives priorities for value add differ from those of plan advisors in other areas. This report digs into what plan advisors find useful in the realm of value add and why. One of our key findings is that top DC plan advisors want value add that can be used for both improving their own practices (generating sales leads, for example) and for using with plan sponsor clients (financial market insights, for example). Unfortunately, DCIO firms as a whole are not delivering that desired split. The good news is that slight course corrections, rather than dramatic shifts, can make a big difference. Managing a suite of value-add programs is not easy. Asset managers must strike the right balance of new and existing value-add programs, assess what s really at stake, and adapt to changing markets. There s a genuine payoff, then, for DCIO managers that are able to craft distinctive and useful value add that advisors come to rely upon. Those features characterize the DCIO firms that top plan advisors rank the highest for value add including BlackRock, JP Morgan, Fidelity, American Century and more. This report addresses three main research questions: 1. What are the goals of DCIO value-add programs? 2. What do financial advisors who specialize in DC plans really want in value-add programs? 3. In an era of constrained resources, how should asset managers think about the overall task of creating and maintaining DCIO value-add programs? Tom Modestino, Rita Raagas De Ramos and Loren Fox, report co-authors

4 Methodology This report is based on proprietary surveys of four main audiences conducted by Ignites Retirement Research: 1. We solicited the opinions of the Financial Times Top 401 Plan Advisors, a select group of DC plan advisors from across the U.S. with an average of $770 million in DC plan assets under advisement. Advisors applied for inclusion in the list, which was published in the Financial Times. Ignites Retirement Research ranked the 401 plan advisors, and our research partner, Broadridge Financial Solutions, provided unique data from its proprietary databases to help identify advisors who specialize in serving DC plans. These are true specialists: the average advisor on the list has 71% of his or her total practice s assets under management concentrated in DC plans. We surveyed this group twice. In February-March 2015, we surveyed all 401 advisors. In August 2015, we surveyed a smaller group of 125 of these advisors, managing a total of $83 billion in DC plan assets as of June 30, For the perspective of asset management sales executives, we drew on a July-August 2015 survey of DCIO sales leaders. The survey covered 16 DCIO firms managing a total of roughly $300 billion in retail DCIO assets as of Dec. 31, To get the views of those working on DCIO managers marketing efforts, we surveyed executives in DCIO marketing in February 2015; respondents represented a variety of firms, which managed a total of more than $500 billion in DCIO assets. 4. Opinions of DC plan sponsors drew on Ignites Retirement Research s March 2015 survey of 200 plan sponsors domiciled in the U.S. The surveyed sponsors represented roughly 6.3 million plan participants and $63 billion total assets in their primary DC plans; 71% of the primary DC plans were under $100 million in size.

5 Ignites Retirement Research: Actionable intelligence for DCIO managers Our proprietary surveys are complemented by interviews with key executives, analysis of data, and the knowledge of our own expert analysts to help with tough strategic questions. Proprietary surveys we ve fielded include: DCIO Managers DCIO Marketing Heads Specialist Plan Advisors (FT 401) DC Recordkeepers Target Date Fund Providers Third Party Administrators DC Plan Sponsors Retail Investors (age 50s & 60s) Subscribing clients include: Broadridge Financial Solutions Fidelity Investments Goldman Sachs Janus Capital John Hancock Investments Lincoln Financial Group OppenheimerFunds T. Rowe Price Wells Fargo Many more Personnel Tom Modestino is Retirement Research Director at Ignites Research. Previously, he was an Associate Director at Cerulli Associates, where he led the retirement practice. Prior to that, Tom held senior marketing positions at New York Life Investment Management, John Hancock and Sun Life of Canada. He earned his BA from Boston College. Contact Tom at Rita Raagas De Ramos is US Research Manager at Ignites Research, where she is part of the Distribution and Retirement services. She was previously the Managing Editor of Ignites Asia, and before that worked at Dow Jones Newswires, UPI, and elsewhere. She earned a BS from the University of the Philippines. Contact Rita at rderamos@money-media.com Loren Fox is Director of Research at Ignites Research. He had been a senior research analyst at Strategic Insight. Prior to that Loren was a journalist, working at Institutional Investor and elsewhere. He earned his BA from Johns Hopkins University and MS from Columbia University. Contact Loren at lfox@money-media.com For information on subscriptions or single-report purchase, please contact Ben Northover at BenN@Ignites.com or