Building out a retirement income ecosystem for people in defined contribution plans will need more than just an investment product, according to new research from Cerulli Associates.
The Cerulli Report—U.S. Defined Contribution Distribution 2026, found that 46% of pre-retirees want the ability to withdraw money at any time, nearly 40% want a personalized, detailed, and actionable plan to follow in retirement, and almost a third (31%) want the ability to change their investments. The study also found that 39% want a guaranteed monthly payment that continues after their savings run out.
The data underlines the need for the industry to combine investment solutions with participant advice and planning, as well as education for plan sponsors and intermediaries, and recordkeeper infrastructure, according to Cerulli.
Cerulli was also told by DC industry consultants that the average retirement plan may need two or three different options on the plan menu to meet the varied needs of participants.
"Given the high degree of personalization that goes into developing and executing on a retirement income strategy, meeting the needs of all, or even most, participants with a single retirement income solution is challenging," said Chris Bailey, director at Cerulli, in a statement.
"Most pre-retirees are uncomfortable making key retirement income decisions without an advisor's help," he added. "As much as they want guaranteed income in retirement, pre-retirees also want a personalized, detailed plan they can follow in retirement," he adds.
Set against this backdrop, the infrastructure provided by recordkeepers is key. Almost three quarters (70%) of recordkeepers described the provision of support for guaranteed income solutions and the improving retiree distribution options as a priority for their organization.
"Recordkeepers and plan advisors have an opportunity to help participants develop retirement plans to utilize these products effectively,” said Cerulli’s Bailey. “Perhaps increased access to planning and advice will reduce the need for flexibility that intermediaries and participants seek.”
In a separate recent study, Cerulli and Morningstar found that a mere 10.2% of an advisor’s wealth clients came from a DC plan relationship.
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