Market analysis agency Cerulli Associates predicts that financial advisors will play an even bigger role in the defined contribution plan market because the trade is about to see development in micro 401(ok) plans, these with lower than $5 million in property.
Cerulli performed an internet survey of 24 DC recordkeepers within the third and fourth quarters of 2024 for its “U.S. Retirement Market 2024” report. It discovered that 57% of these recordkeepers mentioned between 50% and 99% of DC plans have been already being offered by way of advisors.
Nonetheless, there may be an expectation that the number of micro DC plans will grow from roughly 600,000 today to over a million in a decade, spurred by SECURE 2.0 tax incentives and state-sponsored retirement plan packages. That is prone to result in larger involvement from monetary advisors in promoting these plans to their present shoppers. For instance, 83% of surveyed recordkeepers mentioned the proportion of wealth advisors or non-specialist plan advisor corporations available in the market will enhance over the following three years.
“I believe advisors can capitalize on the prevailing wealth administration relationships they’ve with small enterprise proprietor shoppers to promote plans to these already present shoppers,” mentioned Elizabeth Chiffer, analysis analyst, retirement, with Cerulli and the lead creator on the report. “Additionally, in the event that they don’t have already got relationships with these plans by way of wealth administration [contacts], they could search to work with small enterprise house owners to get them extra wealth administration shoppers. I believe advisors have all the time form of labored on the smaller finish of the market. So, we anticipate that to proceed.”
A Cerulli survey of 401(ok) plan members discovered that 25% of those that work with a monetary advisor discovered them by way of their plan supplier or advisor.
