Advisers Have Consultant-Like Qualities

Cerulli Associates’ latest U.S. asset management research found top-tier retirement specialist advisers share more in common with institutional consultants than with other advisers.

According to “The Cerulli Edge – U.S. Asset Management Edition” March 2012 issue, Cerulli estimates that slightly more than 600 advisers or adviser teams display retirement consultant-like characteristics and require coverage that reflects their approach.

In the past, Cerulli notes, it was not hard to distinguish between retail advisers and institutional consultants. Now, the fee-for-service model, rather than a commission structure, has expanded into the less than $50 million plan market, which has traditionally been the domain of the retail adviser. The top-tier DC adviser firms have transitioned to become registered investment advisers (RIAs), or are dually registered, in order to be compensated through fees and to accept fiduciary status.

According to Cerulli, this has created a coverage challenge for asset managers. These top-tier DC adviser firms have fully developed practices that do not benefit from the practice management, business development support and other common value-add programs that are offered by defined contribution investment-only (DCIO) wholesalers. Targeting these firms may also not be productive for DCIO wholesalers.

Some wholesalers have indicated that these firms have a developed process for investment selection, and the typical adviser/wholesaler relationship does not have much influence on eventual fund use. Top-tier firms, however, may not have the assets under advisement (AUA) necessary to meet asset managers’ thresholds for institutional coverage, which leaves asset managers to reconsider their DCIO sales model and develop coverage for this adviser group.

Cerulli interviewed some asset managers who have reported success via agreement between the institutional and retail sales teams as to which segment should cover these advisers who fall into the area between institutional and retail.

According to Cerulli, top-tier adviser coverage could be handled by someone in key accounts or by a newly created position. Another change might be to extract the DC team from the retail and institutional segments of the organization and have it report directly to corporate, Cerulli says.

The report is available for purchase by contacting