If there was any doubt, the October 2010 401kExchange Opportunity Indices (reporting the percentage of plans that indicate they are currently searching for or thinking of changing recordkeepers, funds or advisers) definitively show that DC plan sponsors are much more concerned about finding the right adviser than changing their funds or recordkeepers.
While recordkeepers still have the power because of the concentration of plans and assets among very few firms, plan sponsors no longer believe that changing them is important - never mind necessary.
The numbers don't lie
Almost 14% of the 80% of the 3,250 plans interviewed in October which use an outside adviser indicated that they are likely to make a change.
Compare that to just 2.5% of plan sponsors suggesting a recordkeeper change and you begin to understand the disparity.
Fund changes are still healthy and growing, at more than 8%.
With heightened sponsor awareness about fees, fiduciaries and participant readiness - which will be further exacerbated by upcoming regulations - advisers will remain at the forefront.
With the power clearly shifting to distributors and away from platforms, some of them are taking advantage of the opportunity.
Some wire-houses are starting to place a greater emphasis on supporting and grooming DC advisers; the largest independent broker dealer, LPL, made a major statement by acquiring NRP right after they had announced their public offering.
Specialty groups like RPAG, which has ties to NFP and Financial Telesis, Sageview, CapTrust and Gallagher are growing rapidly.
Even smaller groups of advisers led by just a few professionals are accumulating hundreds of millions and even billions of dollars in assets, and are leveraging their knowledge, infrastructure, partners and books of businesses to grow at amazing rates.
As these groups and organizations emerge and grow, they become easier to identify (see The 401kWire's recent list of the top 300 DC advisers).
Savvy providers will continue to structure their businesses around these so called "Elite 5,000" DC advisers, helping to further distance them from the "blind squirrels" in the business and giving those advisers the resources and support to sustain their growth.
There will never be a better time for advisers entrenched in the DC market to grow their practices and continue to take advantage of the opportunities in the market - especially fee-based advisers that can become named fiduciaries. The efforts that these advisers make now will bear fruit for decades to come.
While it is harder than ever for dabblers and inexperienced advisers to penetrate the DC market, for those considering entering this market there is really no choice. The looming distribution phase of Baby Boomers, which could be the largest transfer of wealth in history, is an opportunity that is just too hard to ignore.
Barstein is the president of 401k Exchange. He can be reached at firstname.lastname@example.org.
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