Brightwork Insights

Defined Contribution Participant Perspectives

Fourth in a Series Deductibility Matters In the heat of the tax reform debate last fall one trial balloon hovering over Capitol Hill was the full or partial “Rothification” of 401(k) contributions. ‘Nobody maxes their contributions,’ the argument went (close to true, it’s under 10%) and ‘Nobody will notice if they are contributing on an […]

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Paint my Retirement

How do active DC participants envision their retirement? Of eight retirement scenarios tested, “working at least part-time” is by far the most prevalent at 49%; only 24% of today’s participants expect to be in a position to travel extensively, for example, while barely a fifth (21%) expect to be able to help out younger family […]

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Retiremen‌t Confidence Ebbs

With (generally) frothy equity values, sizzling GDP growth, improving labor force participation rates and buoyant participant economic attitudes, DC participants should be cruising into a golden age of confidence and engagement. It may be coming, but we haven’t seen it yet. On the contrary, the same participants who perceive positive economic energy overall are oddly […]

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Happy Days are Here Again (?)

When it comes to the big economic picture, active DC participants today are happier and more secure than at any point in the seven-year history of these measurements. The proportion of participants expecting a recession has declined steadily over the years; at 16% this level is about half of what it was in 2010. As […]

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Service Model Stasis?

Advisors are about equally likely to recommend each of three service models tested in Retirement Services Intermediaries (RSI) studies: the traditional completely bundled service model (think Fidelity or Principal, 63%); the TPA interface service model (think John Hancock or Nationwide, 55%) and what we call a completely unbundled service model which blends an advisor, a […]

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Do Medium Advisors Deserve More Respect?

For almost as long as Brightwork has segmented 401(k) advisors by the share of their practice income deriving from 401(k), providers have ignored Medium advisors (20% to < 60% of income, 29% of advisors) and focused instead on 401(k) specialists, or Heavy advisors (60% or more, 27% of advisors). But should they? The arguments for […]

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Graduating to Higher Ed, the New Focus of 403(b) Advisors

Topics in 403(b) Distribution: Third in a Series To the litany of 403(b) advisor transformation over the past five years add shifting plan sponsor focus. As occasional 403(b) advisors have been displaced by more committed practitioners and retail clients have been displaced by institutional clients, so too have 403(b) advisors reordered their prospecting priorities. The […]

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Losing Lights: 403(b) Distribution Gets More Serious

Topics in 403(b) Distribution: Second in a Series Five years ago the 403(b) distribution channel resembled 401(k) in that about half the advisors were “occasionalists” (Lights in our parlance) and about a quarter were specialists or Heavies. Transitional or Medium advisors made up about a quarter of both the 401(k) and 403(b) channels. Those proportions […]

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Vanishing Distinction: 403(b) Advisors Take on Other DC

Topics in 403(b) Distribution: first in a series 401(k) advisors troll the for-profit ponds while 403(b) advisors cast their lines into not-for-profit waters, right?  Well, not exactly. Updating our seminal 2012 study of advisors who sell 403(b) plans, we once again find that 403(b)-active advisors actually derive a significantly greater share of their income from […]

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The Elusive Value Add of Practice Support

Topics in 401(k) Distribution: ninth in a series Providers often focus on practice support as a strategy to attract, retain or deepen relationships with advisors.  Advisors often take a jaded view of these initiatives, not least because there are so many of them out there.  We use the term broadly to cover everything from practice […]

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Preferred Provider Programs: Beyond Compensation?

Focus on Retirement Plan TPAs Institutional retirement services firms that partner with local and regional TPA firms have long used preferred provider programs to attract and build loyalty among the most attractive TPAs.  Do TPAs care? Which program components do TPAs value most—and least? Our new New Brightwork research shows that TPAs in fact do […]

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Measuring Plan Effectiveness

Topics in 401(k) Distribution: eighth in a series When plan sponsors, providers and advisors talk about plan health or plan effectiveness, what’s driving their view?   Is it familiar, conventional plan metrics, participant outcomes or some blend of the two? Over three research waves since 2012 we’ve seen a fairly stable blend of both perspectives with […]

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The Agile RIA

401(k) Distribution: The Decade Just Ended – seventh in a series Although more than one in five 401(k) advisors (22%) describe their primary affiliation as a registered investment advisor, a total of 57% write at least some business as an RIA (or as investment advisor representative (IAR) under a corporate RIA).  This ranges from 73% […]

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Back to Fully Bundled?

401(k) Distribution: The Decade Just Ended – sixth in a series Until 2011 it was an easy call. The once unstoppable TPA interface service model (think John Hancock or Nationwide) was imploding in the face of a new, completely unbundled service model—which we defined as advisor-selected funds on a trading platform paired with an independent […]

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Where do 401(k) Advisors Live?

401(k) Distribution: The Decade Just Ended – fifth in a series Remember insurance-based 401(k) advisors?  Paragons of proprietary funds and group annuity contracts they may have been, but they ruled the roost only a decade ago, often with large and stable books of business. In 2005, fully 37% of 401(k) advisors identified themselves as affiliated […]

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Triumph of the Heavies?

401(k) Distribution: The Decade Just Ended – Fourth in a Series A decade ago, Heavy advisors (those deriving 60% or more of their income from 401(k)) constituted 18% of the channel and accounted for 55% of asset sales.  Last year they constituted 26% of the channel and commanded 63% of the asset sales.  They are […]

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It’s About the Investments, Right?

Topics in 401(k) Distribution – Third in a Series Not necessarily. Advisors are investment pros so it follows that 401(k) fund advisors see their value proposition mainly in terms of supporting investment and investment manager decisions, right?  True, for some advisors, some of the time.  But for two-thirds or more of all 401(k) advisors, annual […]

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Fiduciaries Topping Out?

401(k) Distribution: The Decade Just Ended – Second in a Series With the Department of Labor’s proposed fiduciary rule still under consideration, it’s informative to step back to see how 401(k) advisors themselves describe their responsibilities.  Last year, two-thirds said they think of themselves as a fiduciary on the plans they sell. Conveniently, if perhaps […]

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Forever Fee?

401(k) Distribution: The Decade Just Ended – First in a Series In 2005 more than six 401(k) advisors in ten (61%) described their practice as mainly commission-based; only 24% described their practice as mainly fee-based.  Today the figures are almost exactly inverted with 59% of advisors calling themselves mainly fee-based and only 29% describing themselves […]

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