DC Plans Increasingly Use Investment Consultants

Forty-one percent of defined contribution assets are controlled by consultants, with the majority of these assets in large plans with more than $500 million in assets, according to Cerulli Associates.

Cerulli anticipates that figure should continue to increase as plan sponsors look to augment the fiduciary skill associated with their plans, and demand best-of-breed managers and custom target-date funds. According to the third quarter issue of The Cerulli Edge—Retirement Edition, there has been a continued shift by consultants of client assets into alternatives and long-duration fixed income, as more than three-quarters of consultants said they desire a consistent investment performance track record and no surprises.

In a press release about the report, Cerulli said institutional investment consultants have become a critical avenue for asset managers hoping to distribute through a 401(k) platform. The report suggested asset managers should develop the role of the portfolio specialist, as consultants respond positively to this role, and 57% of consultants feel access to a portfolio manager is very important.

“By understanding how investment consultants operate and effectively meeting their demands, managers can be best poised to take part in custom target-date funds and open-architecture DC platforms,” Cerulli said.

The report can be purchased at www.cerulli.com.