DCIO Branding Among Plan Participants

Transcription

1 DCIO Branding Among Plan Participants How DCIO managers can improve their positioning by building direct connections to DC plan participants. May 2016 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: Plan Participants in DCIO Marketing 7 The Risk of Disintermediation 9 Chapter 2: Which DCIO Brands Are Tops, and Why 12 Traits Driving DCIO Firms Popularity 16 Chapter 3: Honing the Branding Strategy 20 Building Trust 21 Main Recommendations for Action From the Report 26 Table of Illustrations Figure 1: Growth in Asset Managers Retail DCIO Marketing Budgets in 2016? 7 Figure 2: Asset Managers Top Retail DCIO Marketing Priorities for Figure 3: Can DC Plan Investors Tell Plan Administrators From Mutual Fund Managers? 9 Figure 4: How Asset Managers Market to IRA Owners and Potential IRA Owners 10 Figure 5: Most Frequently Used Fund Families in DC Plans 12 Figure 6: Participants, Sponsors & Advisors on Best Fund Firms for Brand 14 Figure 7: Plan Participants on Superior Fund Firms for Cost, Returns, Communication 15 Figure 8: Key Contributors to DCIO Firms Popularity 17 Figure 9: Most Crucial Traits Plan Participants & Advisors Seek in DCIO Firms 18 Figure 10: Top Branding Challenges Facing DCIO Marketing Heads 20 Figure 11: Top Factors Driving Plan Participants Investing Decisions 20 Figure 12: Where Participants Turn for Retirement Guidance 21 Figure 13: Top 5 Ways Asset Managers Can Build Participant Trust 21 Figure 14: Top Communication Changes to Improve Asset Managers Reputations 22 Figure 15: DCIO Executives on Top Areas to Improve Marketing to Plan Participants 23 2 DCIO Branding Among Plan Participants May 2016

3 Executive Summary Marketing in the retail DCIO space typically means prioritizing financial advisors and consultants, followed by plan sponsors. DC plan participants typically are the third priority, if they rate any effort. However, DCIO managers are missing an opportunity in not putting more emphasis on branding to DC plan participants. Even if plan participants rank third in priority for asset managers behind advisors and sponsors, DCIO marketers need to better target plan participants in order to maximize the limited resources they devote to this audience. And fund firms don t want to be disintermediated by recordkeepers and sponsors, and thereby lose touch with end-investors that could erode their ability to communicate their value proposition. After all, we found that asset managers number two priority in retail DCIO marketing is building differentiation among peers and their number three priority is increasing brand awareness both of which can be helped by connecting with plan participants. The good news is that 44% of the plan participants we surveyed say they know the difference between the brands of the mutual funds they use and the brand of the plan administrator. This means there s a sizable investor audience that s worth reaching and that asset managers can reach, beyond the intermediation of recordkeepers and sponsors. This report looks at the opportunities that DCIO firms can take advantage of in order to improve their positioning and build their brands with investors. This involves knowing what drives brand loyalty among DC plan investors and which traits tend to be underestimated by asset managers. It also includes aligning messaging with the values prized by plan participants. How much transparency do plan participants need? What can marketers do to complement investment performance? To help managers reassess how their marketing affects plan participants, this report addresses three main questions: 1. How should asset managers be thinking about branding efforts as they relate to DC plan participants? 2. Which DCIO firms are rated by investors as best in brand, and why? 3. What do plan participants seek in mutual fund firms, and how can those traits help build brand awareness? Loren Fox, Rita Raagas De Ramos and Matthew Van Wagenen, report co-authors 3 DCIO Branding Among Plan Participants May 2016

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 401 Top 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. For this report, we surveyed 225 of the FT 401 advisors in December 2015 and January 2016; that group managed $162 billion in DC plan assets as of Sept. 30, We obtained the perspectives of heads of retail DCIO marketing (or heads of DCIO/ distribution) at eight asset management firms in March These firms represent a total of $1.4 trillion in long-term mutual fund and ETF assets as of Feb. 29, To get the views of DC plan participants, we surveyed 1,020 individual plan participants from across the U.S. in December Some 97% had at least $100,000 in savings, and 33% had more than $1 million. All participants were 40 to 70 years old: 36% were in their 40s, 33% in their 50s, and 31% in their 60s. 4. For the perspective of sponsors, we surveyed 200 plan sponsors in December Most are in the small market: 80% are under $200 million in size, and the median plan had $23 million in assets. All sponsors offer DC plans as primary benefits to employees Money-Media Inc. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. 4 DCIO Branding Among Plan Participants May 2016

5 Ignites Retirement Research is dedicated to helping DCIO teams optimize their exposure and use in employer-sponsored retirement plans. Using proprietary surveys, interviews, and analysis of third-party data, our specialized reports provide a 360-degree view of a key topic in the industry, yielding valuable insight and actionable recommendations. Core topics of coverage include: DCIO sales strategy DCIO marketing DC plan advisors Investment products Distribution channels Investor preferences Clients include: Broadridge Financial Solutions Fidelity Investments Goldman Sachs Janus Capital John Hancock Investments Lincoln Financial Group OppenheimerFunds T. Rowe Price Wells Fargo For information on subscriptions or single-report purchase, please contact Ben Northover at BenN@Ignites.com or Personnel 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 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 Matthew Van Wagenen is a Research Analyst at Ignites Research, where he helps probe retail distribution and DCIO issues. He was previously a senior analyst at Corporate Insight, researching the US brokerage industry; he has also worked in public relations. Matt earned his BS from Seton Hall University. Contact Matthew at mvanwagenen@money-media.com Michael Ferraro is the Operations Manager at Ignites Research, where he oversees the major processes and systems. Previously, he was the Manager of Direct marketing for MandateWire, Pensions Expert, DPN and Ignites Research. Michael currently holds a BS from York College of Pennsylvania and an MBA from Dowling College. Contact Mike at mferraro@money-media.com 5 DCIO Branding Among Plan Participants May 2016