August 10, 2012
--- Although plan sponsors are reluctant to completely overhaul
their plans, evolving defined contribution (DC) plans are creating challenges and
opportunities for advisers, a report found. ---
DC plans would be significantly different than what
is currently offered to participants if they were started today, according to “The State of Large and Mega
Defined Contribution Plans: Investment Innovation and the Plan Sponsor
Perspective.”
Asset managers need to focus efforts on the large and mega
markets, as those markets are likely to implement new designs quicker than
smaller plans, according to Cerulli Associates’ research study on the bigger DC plan marketplace. This
is especially true for the high end of the mega market, where opportunities
will develop first.
Asset managers seeking DC assets need to build relationships
with plan sponsors and consultants as these groups have the most influence on
investment selection. Recordkeepers still hold some influence in the small end
of the large market. The 401(k) market provides the greatest asset opportunity,
and despite the maturity of the market, Cerulli expects that changes in
investment menu design will create additional opportunities.