Record keepers, asset managers and tech companies spend tens of millions of dollars annually on market research and product development, looking to find the next great thing for defined contribution plans. But there are much simpler ways to determine whether a product or service category will resonate.<\/p>\n
In the $3 million to $250 million 401(k) and 403(b) space, where retirement plan advisors and hybrids dominate, change is not driven by plan sponsors. The front-line professionals have 10 jobs and little training, and most senior managers are not focused on their retirement plan, relying primarily on their advisor.<\/p>\n
So what drives advisors to suggest and implement new products or services?<\/p>\n
Though most RPAs and hybrids want to help clients especially to improve participant outcomes, that is not a main driver. If so, HSAs, emergency savings plans and student loan debt-repayment programs would be more popular. HSAs are arguably the best deal in town, especially if used properly with triple tax savings, but there is one problem\u2014advisors do not get paid. Same with retirement income, which arguably hurts advisors that want to capture rollovers \u2014private investments will not boost advisor revenue either, especially with the move to flat fees.<\/p>\n