Beyond Rollovers

Topics in 401(k) Distribution: Fifth in a Series

Rollover IRAs are by far the most important practice focus for most 401(k) advisors, apart from 401(k)s themselves.  SEPs, SIMPLEs, single-person 401(k)s and other business services sold to decision makers at plans they advise aren’t far behind.

What does this tell us about 401(k) advisors?

It tells us that most of them are mainly wealth management advisors, often with only a toehold in the 401(k) business.  Consider Light advisors (46 percent of 401(k) advisors), those with an average of only seven percent of their practice income from 401(k).  Compared to all 401(k) advisors they are even more focused on rollovers (+7 points) and small business retirement plans (+4 points).  But they are much less focused on institutional retirement products such as defined benefit plans (-18 points), combined DB and DC plans (-18 points), non-qualified plans (-17 points) and 403(b) plans (-10 points).  As well, they are much less likely to emphasize selling other business services to plan executives (-12 points), ESOPs (-11 points) or voluntary benefits (-6 points).

Heavy advisors (26 percent of 401(k) advisors; derive an average of 89 percent of their income from 401(k)), in contrast, have an almost a reciprocal profile. For them, non-qualified plans (+17 points), DB plans (+15 points), 403(b) plans (+13 points), combined DB and DC plans (+12 points) and ESOPs (+9 points) are much more important.  But rollovers (-22 points), small business retirement products (-20 points), retail investment and insurance products (-12 points), voluntary benefits (-10 points) and other business services (-8 points) fall off the priority list.

Whatever the strengths and weaknesses of Light and Heavy advisors, they at least know what they do and don’t do.  The same cannot be said of Medium advisors (28 percent of advisors; derive 35 percent of their income from 401(k)), a segment we sometimes think of as ‘emerging specialists’ or Heavies in training. To them, everything is more important, i.e., they haven’t yet sorted out how to succeed in the 401(k) business.

Driven by their wealth management backgrounds Medium advisors place enormous emphasis on selling other business services (+28 points) and retail investment and insurances products (+14 points) to executives at plan sponsor organizations; selling small business retirement products (+12  points) as well as selling rollovers (+9 points).  They are also all over voluntary benefits (+19 points) and ESOPs (+10 points). Oh and did we mention, they emphasize combined DC and DB plans (+17 points), DB plans (+16 points), non-qualified plans (+13 points) and even 403(b) plans (+5 points) as well.  Good luck with all that.

Medium advisors, then, are distinguished both by their lack of discrimination or clarity in articulating a value proposition and by their commitment to growing their 401(k) business—nearly nine in ten (89 percent) expect to emphasize the growth of this practice in the year ahead. Sounds like fertile ground for practice development support from providers, doesn’t it?

About the Research

Retirement Services Intermediaries studies were launched in 2000 by Brightwork Partners LLC; Brightwork was acquired by NMG Consulting in 2017. Findings are based on selected RSI waves carried out between 2005 and 2018. These studies are conducted by telephone, typically among a representative cross-section of 600 or more advisors deriving income from 401(k) plans. RSI 12 is scheduled for delivery by year-end 2018.

About NMG Consulting

NMG Consulting ( is the leading multinational consultancy focusing solely on investments, insurance and reinsurance markets. NMG works with financial organizations to shape strategy, implement change and manage performance. NMG Consulting has approximately100 employees spread across offices in Sydney, Perth, Singapore, Cape Town, Kuala Lumpur, London, Toronto, Kansas City and Stamford.  The firm was established in 1992.

For more information

Merl W. Baker, 203.487.2000;