U.S. RETIREMENT MARKETS

Transcription

1 U.S. RETIREMENT MARKETS 2017 The Rise of Fiduciary Services Overview & Methodology In its fifteenth iteration, this annual report represents Cerulli s broadest coverage of the U.S. retirement market and addresses the following retirement segments: individual retirement accounts (IRA), corporate and not-for-profit (NFP)/governmental defined contribution (DC) plans, and corporate and public defined benefit (DB) plans. Important metrics such as historical and projected assets, number of plans/ accounts, and number of participants for each of the five retirement market segments are detailed. The report also examines demographic trends within U.S. employer-sponsored retirement plans. The primary data sources for this report are Cerulli s proprietary Form 5500 Series Database and an annual proprietary survey of (k) plan sponsors. This year s report also includes select leaderboards of the largest 401(k) plans and ERISA-covered 403(b) plans by industry. This report is also informed by a number of proprietary surveys conducted throughout 2017 related to DC plan recordkeepers and defined contribution investmentonly (DCIO) asset managers. Qualitative insight is provided from nearly 100 interviews with individuals or firms across the industry. Benefits: y Analyze U.S. retirement market sizing by detailed segmentation y Examine corporate DB and DC assets, plans, and participants by plan asset and participant segments y Review trends in 401(k) plan design by plan asset segmentation, and explore plan sponsor attitudinal behaviors with corresponding strategy recommendations y Access to select 401(k) and ERISA-covered 403(b) plan leaderboards by industry Questions Answered: y How do asset managers view third-party fiduciary service providers and how do they fit into their distribution coverage model? y What attributes do 401(k) plan sponsors consider when selecting a targetdate fund? y Who are the top DC asset managers? What opportunities are there for asset managers without a recordkeeping affiliation? y How has funded status volatility impacted DB plan sponsors decisions to adopt liability-driven investing strategies? y Which segment of the total IRA market is expected to experience the greatest asset growth between 2017 and 2022? SUBSCRIPTION DETAILS $19,000 PURCHASE INCLUDES y Digital copy and hardcopy in color y Online access to 20 related reports y Unlimited online firm-wide access y Exhibits in Excel y Key findings y Analyst support For more information, contact us: ``info@cerulli.com ANNUAL COST 227 PAGES 181 EXHIBITS y Interactive Report Dashboards NEW y Executive Summary Video NEW RESEARCH INCLUDED WITH SUBSCRIPTION y 14 years of The Cerulli Report U.S. Retirement Markets y Retirement Plan Distribution Dynamics: Small- and Mid-Sized Plan Focus y State of Large and Mega Defined Contribution Plans: Investment Innovation and the Plan Sponsor Perspective 2012 y State of DCIO: Evolving Asset Manager Opportunities in the Mid-Sized and Small Marketplaces y State of Retirement Income: Addressable Opportunity Strategies and Future Outlook y IRA Rollover and Retention: Strategies and Positioning y Pension and Investment Consulting: Insight for Asset Managers in DB and DC Cerulli Interactive Report Dashboards NEW Experience Cerulli s digital platform and interact with analyses from this report With this report subscription, we re pleased to include this interactive dashboard: 1. Retirement Markets Comprehensive Overview: Explore historical, current, and projected assets for each retirement market segment. CERULLI ASSOCIATES info@cerulli.com

2 What are Interactive Report Dashboards? As part of your Cerulli report subscription, we are pleased to provide you with Interactive Report Dashboards that allow you to interact with report data in unique ways: ACCESS Access consolidated data from multiple report exhibits in a single comparative view. FILTER DATA Apply filters to Cerulli report analyses including assets under management, net new flows, product type, channel, year, marketplace, and currency. EXPORT Easily build and export custom charts. Export options include; Excel, PDF, or image file. My Account: Joe Q. Sample How to Access Interactive Report Dashboards This service is complimentary and is accessible through our website. Use your unqiue Cerulli website login credentials, and you will find a View Interactive Report Dashboards link to this platform under My Reports. Interact View Dashboard You can also jump to related Interactive Report Dashboards in the report PDF by clicking on the Interact button shown on the left for reference. USER LOGIN To obtain online access, please visit or contact our account management team at: ``info@cerulli.com ` ` CERULLI ASSOCIATES info@cerulli.com

3 Chapter 1 The Rise of Fiduciary Services and Implications for Asset Managers Exhibit 1.04 Outsourced Fiduciary Services in the Small DC Plan Market, 2017 Flexible 3(38) is not a separate or distinct service from ERISA 3(38); however, it speaks to the evolution of this service and providers overall emphasis on positioning themselves as accommodating to advisors. Source: Cerulli Associates Analyst Note: This information is intended to be a summary. Please seek ERISA counsel for specific questions. "ERISA 3(21)" "ERISA 3(38)" Flexible 3(38) Provides a screened list of funds from which the plan fiduciary selects and implements Nondiscretionary Provides a screened list of funds Selects and implements funds from list Discretionary Provides a screened list of funds Selects and implements funds from list with advisor dialogue Reviews and provides approval for existing funds offered Discretionary ADOPTION INCREASING FOR "ERISA 3(38)" SERVICES 30 The Cerulli Report U.S. Retirement Markets 2017

4 Table of Contents: Expanded Key Questions Answered How are fiduciary services being offered in the DC plan market? Which sub-asset classes do asset managers identify as the best opportunity to gather DC core menu assets? What was the distribution of 401(k) plans by plan participant segment in 2016? Where do investment consultants expect asset allocation shifts within corporate DB plans? Which segment of the IRA market has exhibited the strongest recent growth? For what reasons do 401(k) plan sponsors offer financial wellness programs?...23 Chapter 1: The Rise of Fiduciary Services and Implications for Asset Managers Fiduciary 101: A Brief Refresher...25 Exhibit Three Principal Fiduciary Roles, Fiduciary Services: A Spectrum...26 Exhibit DC Plan Segments: Fiduciary Services Spectrum, Baked In Focus...29 Exhibit Select Fiduciary Service Providers, Exhibit Outsourced Fiduciary Services in the Small DC Plan Market, Exhibit (k) Plans and Assets in the Less Than $10 Million Asset Segment, Exhibit (k) Plan Sponsors: Reasons for Conducting an Advisor/Consultant Search, Conclusion: Evaluating Fiduciary Services from a Distribution Perspective...33 Exhibit Asset Manager Perspective: Key Decision Maker by 401(k) Plan Asset Segment, Exhibit Top DC Recordkeepers in Micro Plan Asset Segment by Number of Participants, Chapter 2: Retirement Markets Overview U.S. Retirement Market Sizing Exhibit Total Retirement Market Assets, E Exhibit Historical Retirement Market Assets by Segment, Exhibit Projected Retirement Market Assets by Segment, 2017E 2022E...39 Exhibit Historical vs. Projected CAGRs by U.S. Retirement Market Segment, vs. 2017E 2022E Exhibit Percent of Total Retirement Market Assets by Plan Type, E...41 Exhibit Percent of Private Sector Workers with Access to a Retirement Plan, 2016 vs The Cerulli Report U.S. Retirement Markets

5 U.S. Retirement Market Assets by Sub-Segment Exhibit Retirement Market Assets by Segment and Sub-Segment, Exhibit Retirement Markets Overview: Assets and Participants, Exhibit Defined Contribution Assets by Segment, Exhibit Defined Benefit Assets by Segment, Exhibit IRA Assets by Type of IRA, Chapter 3: DC Plan Recordkeeper Landscape DC Recordkeeper Landscape Exhibit DC Recordkeeper Landscape, 2010 vs Exhibit Top-25 DC Recordkeepers: DC Assets, Plans, and Participants, Exhibit Top-25 DC Recordkeepers by Recordkept Assets with Proprietary TDF and MA Offerings, Top DC Recordkeepers Exhibit Top DC Recordkeepers by Plan Asset Segment: Number of Plans, Exhibit Top DC Recordkeepers by Plan Asset Segment: Number of Participants, Exhibit Top (k) Recordkeepers by Number of Plans, 3Q Top 401(k) Plan Providers Exhibit Top (k) Recordkeepers by Recordkept Assets, 3Q Exhibit (k) Plan Employee Participation Rates by 401(k) Plan Size, DC Plan Recordkeeper Perspectives Exhibit DC Recordkeeper Perspective: Metrics Used to Measure Plan Health, Exhibit DC Recordkeeper Perspective: Supporting DC Plan-to-Plan Roll-Ins, 2016 vs Exhibit DC Recordkeeper Perspective: Timing for Communicating to Plan Participants to Retain Rollover Assets, (k) Plan Sponsor Perspectives Exhibit (k) Plan Sponsors: Length of Time with Current Recordkeeper, Exhibit (k) Plan Sponsors: Reasons for Recordkeeper Search, Exhibit (k) Plan Sponsors: Expected Recordkeeper Search Databank, Exhibit (k) Plan Sponsors: Important Factors in Selecting a Recordkeeper, Exhibit (k) Plan Sponsors: Managed Accounts Offered in 401(k) Plan and Reasons for Offering, Exhibit (k) Plan Sponsors: Top Priorities for 401(k) Plan, The Cerulli Report U.S. Retirement Markets 2017

6 Chapter 4: Corporate DC Plan Investments Corporate DC Plan Investment Vehicles Exhibit Asset Managers DCIO Assets by Investment Structure, Exhibit (k) Assets by Investment Vehicles, Exhibit Asset Manager Perspective: Greatest Growth Opportunity by Plan Asset Segment, Exhibit Asset Manager Perspective: Investment Vehicle Providing Best DC Asset Growth Opportunity by Plan Asset Segment, Exhibit Asset Manager Perspective: Availability and Use of Non-Revenue-Sharing Share Class in DC Plans, Exhibit Asset Managers Anticipated Changes to Mutual Fund Share Classes, DC Asset Manager Leaderboards Exhibit Top-25 Asset Managers by DC Plan Assets, Exhibit Top-25 DC Mutual Fund Managers, Exhibit Top-25 DC Separate Account Managers, Asset Allocation Opportunities Exhibit (k) Investment-Only Assets vs. Proprietary Assets, Exhibit Asset Manager Perspective: Opportunity for Gaining DC Assets by Category Over the Next 12 Months, Exhibit (k) Asset Allocation by Plan Asset Segment, Exhibit Asset Manager Perspective: Investment Strategies Presenting the Greatest Potential to Gather DC Core Menu Assets, Target-Date Funds and Managed Accounts Exhibit Total Mutual Fund and Collective Investment Trust Target-Date Assets, Exhibit Top-15 Target-Date Managers by Assets, Exhibit Managed Account Sponsors by DC Assets, 3Q Q Chapter 5: Corporate DC and 401(k) Market Sizing Corporate DC Market Exhibit Corporate DC Plan Assets and Growth Rate, E...87 Exhibit Corporate DC Plan Contributions and Distributions, E...88 Exhibit Corporate DC Participant Accounts by Type, E...89 Exhibit Taft-Hartley DC Plan Overview, E Exhibit (k) Assets as a Percentage of Corporate DC Assets, Exhibit (k) Plans as a Percentage of Corporate DC Plans, E...92 The Cerulli Report U.S. Retirement Markets

7 401(k) Market by Assets Exhibit (k) Assets and Growth Rate, E...93 Exhibit (k) Market: Assets by Plan Asset Segment, Exhibit (k) Assets by Plan Participant Segment, E (k) Market: Contributions and Distributions Exhibit (k) Contributions by Source and Growth Rate, E Exhibit (k) Contributions and Distributions, E...97 Exhibit (k) Contributions and Distributions by Plan Participant Segment, Exhibit (k) Distributions and Growth Rate, E Exhibit (k) Market Net Flows, E (k) Market by Number of Plans Exhibit (k) Market: Plans by Plan Asset Segment, Exhibit (k) Plans by Plan Participant Segment, E Exhibit (k) Average Asset Plan Size by Plan Participant Segment, (k) Market by Accounts Exhibit (k) Participant Accounts by Type, E Exhibit (k) Market: Active Participants by Plan Asset Segment, Exhibit (k) Active Participant Accounts by Plan Participant Segment, E Exhibit Average 401(k) Account Balance, Chapter 6: Not-for-Profit/Governmental DC Market Not-for-Profit/Governmental DC Market Overview Exhibit Not-for-Profit/Governmental DC Assets by Segment, E Exhibit Not-for-Profit/Governmental DC Plans: Segment Descriptions, (b) Market Exhibit (b) Assets: ERISA vs. Non-ERISA, E Exhibit (b) and 401(k) Plan Types Comparison, Exhibit (b) Assets by Sector, Exhibit ERISA 403(b) Market: Assets and Plans by Plan Asset Segment, Exhibit Top 403(b) Providers by Number of Plans, 3Q Exhibit Top 403(b) Providers by Assets, 3Q Exhibit DC Recordkeeper Perspective: Expectations for AUA Growth by 403(b) Plan Segment, Exhibit DC Recordkeeper Perspective: Most Important Differentiators to Win 403(b) Plans, Exhibit Marketshare of 403(b) Plan Assets: Life Insurance, VA Mutual Funds, and Non-VA Mutual Funds, Exhibit (b) Plan Mutual Fund Asset Allocation, Q The Cerulli Report U.S. Retirement Markets 2017

8 457 Market Exhibit Plan Assets and Growth Rate, E Exhibit Top 457 Providers by Number of Plans, 3Q Exhibit Top 457 Providers by Assets, 3Q Exhibit Plan Mutual Fund Asset Allocation, Q (a) Market Exhibit (a) Plan Assets and Growth Rate, E Exhibit Average Asset Allocation of Select 401(a) Plans, Federal Thrift Savings Plan (TSP) Exhibit Federal Thrift Savings Plan Assets and Growth Rate, E Exhibit Federal Thrift Savings Plan Contributions and Distributions, Exhibit Federal Thrift Savings Plan Asset Allocation, Chapter 7: Corporate DB Plan Market Corporate DB Market Sizing Exhibit Corporate DB Plan Assets and Growth Rate, Exhibit Corporate DB Plan Asset Projections, 2017E 2022E Exhibit Corporate DB Plan Net Flows, E Exhibit Corporate DB Plan Participants by Status, Exhibit Asset Allocation of Corporate DB Plans, 3Q Q Exhibit Corporate DB Assets, Plans, and Participants by Plan Asset Segment, Exhibit Corporate DB Assets, Plans, and Participants by Plan Participant Segment, Corporate DB Plan Sponsor and Asset Manager Leaderboards Exhibit Largest U.S. Corporate Pension Sponsors, Exhibit Top-10 DB Asset Managers by AUM, Exhibit Top-25 Managers in LDI Strategies, Consultants, Providers, and Sponsors Perspective of Corporate DB Market Exhibit Consultant Penetration in Corporate DB, Exhibit Consultants Expected Allocation Shifts for Corporate DB Plans During the Next 12 Months, Exhibit Consultants Expected Change in Passive Strategies for Corporate DB Plans During the Next 12 Months, Exhibit Institutional Custom Solution Provider Perspective: Opportunities for Institutional Custom Solutions for DB Plans During the Next Months, Exhibit Institutional Custom Solution Provider Perspective: Corporate DB Client Goals, Exhibit DB Plan Sponsor Perspective: Significant Drivers of Derisking, The Cerulli Report U.S. Retirement Markets

9 Chapter 8: Public DB Plan Market State and Local Government DB Systems Exhibit State and Local Government DB Plan Assets and Growth Rate, Exhibit Projected State and Local Government DB Assets, 2017E 2022E Exhibit State and Local Government DB Plan Contributions, Distributions, and Net Flows, Exhibit State and Local Government DB Plan Participants by Status, E Exhibit Asset Allocation of the Largest State and Local DB Plans, 3Q Q Exhibit Consultants Expected Manager Search Activity for State/Local Government DB Plans, Exhibit Consultants Expected Allocation Shifts for State/Local DB Plans During the Next 12 Months, Exhibit Funding Levels of State Retirement Systems, Exhibit Public DB Mandates Placed by Manager, Q Exhibit Largest Public Retirement Plan Sponsors, Taft-Hartley Plans Exhibit Taft-Hartley Assets and Growth Rates, Exhibit Top-35 Taft-Hartley Sponsors by Assets, Exhibit Asset Allocation of Taft-Hartley DB Plans, 3Q Q Exhibit Top-25 Taft-Hartley Asset Managers by Assets, 2Q Federal DB System Exhibit Federal DB: Civil Service Retirement Systems (CSRS) and Federal Employee Retirement System (FERS) Assets and Projections, E Chapter 9: IRA Market IRA Market Sizing and Leaderboard Exhibit Total IRA Assets and Growth, E Exhibit Top-15 IRA Providers by AUA, 2Q Q IRA Market by Account Type Exhibit IRA Assets by Traditional and Nontraditional Assets, E Exhibit Nontraditional IRA Assets by Type, E IRA Rollovers Exhibit IRA Year-Over-Year Growth Rates by Registration Type, Exhibit Annual IRA Rollover Contributions from DC Plans, E Exhibit Components of Traditional IRA Asset Growth, 2011 and The Cerulli Report U.S. Retirement Markets 2017

10 IRA Investments Exhibit Total IRA Assets by Investment Product, Q Exhibit IRA Target-Date and Target-Risk Mutual Fund Assets, Exhibit Total IRA Mutual Fund Asset Allocation, Q Chapter 10: 401(k) Plan Sponsors Exhibit (k) Plan Sponsors Survey Population Statistics, Participation and Plan Design Features Exhibit (k) Plan Sponsors: 401(k) Plan Participation Rate, Exhibit (k) Plan Sponsors: Employer Contributions Offered Databank, Exhibit (k) Plan Sponsors: Company Match Formula Databank, Exhibit (k) Plan Sponsors: Expected Change to 401(k) Match, Exhibit (k) Plan Sponsors: Reasons for Not Offering Employer Contribution in 401(k) Plan, Exhibit (k) Plan Sponsors: Use of Automatic Enrollment Summary, Exhibit (k) Plan Sponsors: Use of Automatic Enrollment Databank, Exhibit (k) Plan Sponsors: Average Participant Deferral Rate and Use of Automatic Escalation Summary, Exhibit (k) Plan Sponsors: Use of Automatic Escalation Databank, Exhibit (k) Plan Sponsors: Reasons for Not Implementing Automatic Features, Exhibit (k) Plan Sponsors: Perspective on Plan Re-enrollments, Plan Priorities and Perspectives on Retirement Saving Exhibit (k) Plan Sponsors: Available Distribution Options for Retired/Separated Participants, Exhibit (k) Plan Sponsors: Availability of Retirement Income Projection, Exhibit (k) Plan Sponsors: Preference for Retired/Separated Participants, Exhibit (k) Plan Sponsors vs 401(k) Plan Participants: Perspectives on Retirement Savings and Investing Responsibility, Exhibit (k) Plan Sponsors: Metrics Used to Benchmark Plan Success, Exhibit (k) Plan Sponsors: Financial Wellness Program Offered, Exhibit (k) Plan Sponsors: Reasons for Offering a Financial Wellness Program, Exhibit (k) Plan Sponsors: Reasons for Not Offering a Financial Wellness Program, Exhibit (k) Plan Sponsors: In-Plan Retirement Income Products Under Consideration, (k) Plan Investments Exhibit (k) Plan Sponsors: Reasons for Selecting Current Target-Date Fund, Exhibit (k) Plan Sponsors: Attributes Considered When Selecting Target-Date Fund, Exhibit (k) Plan Sponsors: Reasons for Conducting a New Target-Date Manager Search, The Cerulli Report U.S. Retirement Markets

11 Exhibit (k) Plan Sponsors: Investment Vehicles Offered, Exhibit (k) Plan Sponsors: Primary Reason for Selecting Passive Option(s) for the 401(k) Plan, Exhibit Large 401(k) Plan Sponsors: Perspective on Appropriateness of Alternative Investments in a 401(k) Plan, (k) Plan Advisors and TPAs Exhibit (k) Plan Sponsors: Length of Time with Current Advisor/Consultant Databank, Exhibit Small 401(k) Plan Sponsors: Use of Third-Party Administrator, Exhibit Small 401(k) Plan Sponsors: Reason for Selecting Third-Party Administrator, Chapter 11: Select 401(k) and ERISA-Covered 403(b) Plan Leaderboards (k) Plan Leaderboards Exhibit Top (k) Plans by Assets, Exhibit Manufacturing: Top (k) Plans by Assets, Exhibit Professional, Scientific, and Technical Services: Top (k) Plans by Assets, Exhibit Finance and Insurance: Top (k) Plans by Assets, Exhibit Healthcare and Social Assistance Services: Top (k) Plans by Assets, Exhibit Retail Trade: Top (k) Plans by Assets, Exhibit Information: Top (k) Plans by Assets, Exhibit Wholesale Trade: Top (k) Plans by Assets, Exhibit Management of Companies (Holding Companies): Top (k) Plans by Assets, Exhibit Transportation and Warehousing: Top (k) Plans by Assets, Exhibit Construction: Top (k) Plans by Assets, ERISA-Covered 403(b) Plan Leaderboards Exhibit Top-25 ERISA-Covered 403(b) Plans by Assets, Exhibit Educational Services: Top-25 ERISA-Covered 403(b) Plans by Assets, Exhibit Healthcare and Social Assistance Services: Top-25 ERISA-Covered 403(b) Plans by Assets, Exhibit Other Services: Top-25 ERISA-Covered 403(b) Plans by Assets, Exhibit Professional, Scientific, and Technical Services: Top-25 ERISA-Covered 403(b) Plans by Assets, Index of Companies The Cerulli Report U.S. Retirement Markets 2017

12 Index of Companies Index of Companies ADP Retirement Services... 53, 55 AON Hewitt... 48, 49 AXA Alight Solutions...49 BMO...49 Bank of America BlackRock... 17, 67, 75, 77, 82, 108, 127, 129, 140, 157, 200, 202 Blackstone Group...49 Blue Prairie...71 CAPTRUST...71 Callan,... 28, 194 Charles Schwab , 167 Conduent... 48, 49 Empower Retirement... 49, 84, 123 Envestnet...17, 18, 24, 25, 28, 29 Fidelity Investments...17, 30, 48, 53, 54, 56, 67, 76, 83, 84, 108, 116, 167 Financial Engines...84 GE Asset Management... 78, 140 Geode Capital Management...76 Great-West...49 HelloWallet ICMA-RC , 123 IRON Financial...29 Inspira... 85, 89 Invesco J.P. Morgan... 49, 74 LPL LearnVest Legal & General Investment Management Lincoln Financial Lockton... 28, 71 MassMutual... 29, 49 Mercer,... 49, 72, The Cerulli Report XXXX 2017

13 Index of Companies Mesirow... 17, 18, 24, 25, Millennium Trust Company... 85, 89 Morningstar... 17, 18, 24, 25, 28-30, 35 Multnomah Group...71 NFP Retirement...28 Nationwide... 29, 54, 123 Natixis...82 OneAmerica...49 Paychex... 53, 55 Putnam Investments...49 Retirement Clearinghouse... 85, 89 SEI...27 Sheridan Road... 28, 71, 72 Stadion...82 State Street Global Advisors (SSgA)...77, 140, 162 T. Rowe Price...83 The Hartford...49 TIAA , 115, 116, 197 Transamerica Retirement Solutions...49 VALIC...54 Vanguard... 17, 48, 56, 67, 76, 77, 83, 164, 200, 202 Voya Financial...29, 30, 49, 115, 122, 123, 188 Wells Fargo...49 Willis Towers Watson...28 Wilshire...17, 18, 24, 25, 28-30, 34, 35 The Cerulli Report XXXX