A new study by T. Rowe Price reveals retirement income and personalization as areas of growing concern for consultants and advisors working with defined contribution plans.
The findings come from the 2024 Defined Contribution Consultant Study, which surveyed 35 leading firms on trends in retirement, target date solutions, and financial wellness.
Among numerous significant shifts, the study found that in 2021, 59 percent of consultants and advisors reported that more than half of their DC plan sponsor clients had no clear stance on the issue; by 2024, that figure dropped sharply to 19 percent. This trend suggests that more plan sponsors are actively addressing retirement income as part of their plan offerings.
“Consultants and advisors are looking for solutions that offer choice, personalization, flexibility and are cost-effective,” Jessica Sclafani, global retirement strategist at T. Rowe Price, noted in a statement.
Personalization, particularly for participants nearing retirement, was a recurring theme in the study. While managed accounts are gaining popularity as an opt-in investment option, target date solutions continue to be the most common default investment alternative.
Read more: Which investments are best for retirement?
The study also found strong support for a transition from mutual fund-based target date solutions to collective investment trusts, primarily due to their cost efficiency. Respondents showed a preference for target date solutions that incorporate both active and passive investment strategies.
“A blend approach has the advantage of offering a potentially lower-cost investment and reduced tracking error,” Sclafani said.
Changes in fixed income investment strategies were also highlighted, driven by the post-pandemic escalation in interest rates. According to the study, 89 percent of respondent firms now prioritize diversification opportunities, compared to 48 percent in 2021. Additionally, there is growing support for non-traditional bond allocations within target date solutions, with active management in areas such as high yield bonds and emerging markets debt viewed as the best strategy when it comes to return-seeking fixed income approaches.
The research also anticipates growth in in-plan emergency savings programs, with 70 percent of firms expecting such offerings to become more common within the next three to five years.
Mayer Brown, GWG's law firm, agreed to pay $30 million to resolve conflict of interest claims.
Orion adds new model portfolios and SMAs under expanded JPMorgan tie-up, while eMoney boosts its planning software capabilities.
National survey of workers exposes widespread retirement planning challenges for Gen Z, Millennials, Gen X, and Boomers.
While the choice for advisors to "die at their desks" might been wise once upon a time, higher acquisition multiples and innovations in deal structures have created more immediate M&A opportunities.
A father-son pair has joined the firm's independent arm in Utah, while a quartet of planning advisors strengthen its employee channel in Louisiana.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave