Report

U.S. Defined Contribution Distribution 2021

Uncovering Investment-Only Distribution Opportunities

Interpret, Innovate, Expand

  • Evaluate provider roles in pooled employer plans (PEPs)
  • Understand the intersection of wealth management and retirement planning
  • Track the growth of outsourced chief investment officer (OCIO) services in defined contribution (DC)

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US Defined Contribution Distribution 2020 Detail

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Drew O'Hearn, CFP

Drew O'Hearn, CFP

Director, Account Management

Summary

This annual report focuses on product development and distribution opportunities for asset managers and other providers in the defined contribution (DC) market. The report also features detailed 401(k) plan sizing and coverage of retirement plan intermediaries (advisors and consultants), along with sizing of the advisor-sold DC market.

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A Note from the Author

The Year of the CIT

Shawn O'Brien, CFA

Shawn O'Brien, CFA

Senior Analyst

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Shawn O'Brien, CFA

Shawn O'Brien, CFA

Senior Analyst

Shawn leads the U.S. Retirement research practice, which focuses on the defined contribution (DC) and individual retirement account (IRA) markets. He also leads and supports strategic consulting projects for asset managers on their DC-related market entry and product distribution strategies.

Prior to joining Cerulli Associates, Shawn worked as a Research Associate at Harvard Business School, where he co-authored case studies on investment management for professional and personal investors and managing and innovating in financial services. Prior to that, he worked in the Currency Management group at State Street Global Markets, employing currency overlay strategies for large asset managers and asset owners.

Full biography here.

Key defined contribution (DC) plan decision-makers, including advisors and consultants, continue to favor collective investment trust (CIT)-wrapped investment products due to their relatively low-cost structure and pricing flexibility.

According to our research, 92% of managers currently offer a target-date series in a CIT. 2021 has seen the use of CITs grow in place of traditional ’40-Act funds as the retirement vehicle of choice. Here are the top factors considered in the development and distribution of CITs.

  • 97% of CIT providers cite lower costs as a very important factor when developing their CIT products
  • 78% rank CITs as very important as an additional vehicle offering for an existing strategy
  • 72% rank the ability to negotiate fees as very important when considering CITs

Many CIT providers have lowered their investment minimums and, in certain cases, waived minimums altogether. Cerulli finds CITs with low (or no) investment minimums are more tenable investment options for smaller plans and advisor firms and could help promote stronger adoption downmarket.

In addition to exploring the rise of CITs, this report includes Cerulli’s latest DC sizing, with detailed coverage of 401(k) asset segments, DC-focused investment strategies and vehicles, and DC intermediaries. Learn more about what’s happening in the DC market with our holistic analysis.

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