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Rating:Getting on the Good Side of 401k Gatekeepers Not Rated 2.8 Email Routing List Email & Route  Print Print
Wednesday, May 23, 2007

Getting on the Good Side of 401k Gatekeepers

Reported by Armie Margaret Lee

The list of mutual fund and asset management firms that are either making their entrance into or sharpening their focus on the defined contribution investment-only space keeps growing, and it's not hard to see why.

Researchers at Cerulli Associates estimate that in DC-IO assets totaled $1.102 trillion in 2005, or 38 percent of the total investment-only market, which also includes subadvised retail separate accounts, subadvised mutual funds and subadvised variable insurance.

In 2006, DC-IO assets ballooned to $1.3 trillion, Cerulli researchers estimate.

But with these opportunities come challenges, among them is how mutual fund firms should deal with the entities on whom their success or failure in the DC-IO space largely rests. In the large-plan market, for instance, gatekeepers include Callan Associates, CRA Rogers Casey, Mercer, Watson Wyatt and New England Pension Consultants.

For the small-plan market, a hot area of growth, asset managers must play their cards right with both recordkeepers and advisors.

In the May issue of The Cerulli Edge, researchers at the consulting firm provide a guide to the main gatekeepers and that strategies that should be pursued for each type of gatekeeper, from consultants to platform providers/recordkeepers to plan sponsors.

"These gatekeepers have various levels of education and asset managers must emphasize certain information depending on their audience's education," the researchers wrote.

The paper outlined three DC-IO sales strategies. The first strategy involves partnering with platforms that embrace open architecture and seek to include best-of-breed investment products. The second involves filling gaps in their platforms' investment menus, and the third involves looking for platforms that are operationally efficient and can provide competitive revenue-sharing arrangements. 

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