Annual Defined Contribution Consultant Study
highlights viewpoints on key retirement trends and investment
themes from 35 of the nation's leading consultant and advisory
firms
BALTIMORE, Sept. 17,
2024 /PRNewswire/ -- T. Rowe
Price, a global investment management firm and a leader in
retirement, today released findings from its 2024 Defined
Contribution Consultant Study. The findings capture the latest
perspectives from defined contribution (DC) consultants and
advisors on target date solutions, retirement income, investment
trends, and financial wellness programs. Additionally, this year's
study explores respondents' thoughts on managed accounts,
alternative investments, and the value of active versus passive
management.
The annual research suggests more DC plan sponsors are taking a
stance on retirement income. In 2021, consultants and advisors
described greater than half (59%) of their DC plan sponsor clients
as not having a stated opinion on retirement income. In 2024, this
same figure declined to 19%. While not all plan sponsors are
prioritizing retirement income, they are significantly more likely
today to have a view on retirement income compared to prior
years.
Another key finding highlighted that personalization is
perceived as particularly beneficial as participants approach
retirement, and there is strong support for managed accounts as an
opt-in option offered on the investment menu. However, it seems
unlikely that managed accounts will surpass target date solutions
as the most common qualified default investment alternative
(QDIA).
Several additional themes emerged from the study, including:
- Consultant and advisor perspectives on fixed income and capital
preservation investments broadly are shifting as interest rates
rise post-global pandemic. Findings show 89% of respondent firms
have a "greater focus on diversification opportunities," when
evaluating fixed income investment options compared to 48% in
2021.
- Results show support for adding or increasing an allocation to
non-traditional bonds within target date solutions. Furthermore,
when evaluating consultant and advisor implementation preferences
for fixed income strategies, return-seeking fixed income approaches
are consistently viewed as best implemented using active management
(e.g., bank loans, emerging markets debt, high yield, and
international or global bond.)
- Consultants and advisors overwhelmingly support the transition
from target date solutions provided through mutual funds to
collective investment trusts (CITs), primarily due to CIT's
typically cost-effective fee structures. Survey results also
highlighted growing support for target date solutions that employ a
blended mix of active and passive investment strategies. A blend
approach has the advantage of offering a potentially lower cost
investment and reduced tracking error, while still maintaining the
advantages of active management.
- Building emergency savings appears to be gaining in importance,
with 70% of respondent firms predicting that in-plan emergency
savings programs will become more commonly available in the next
three to five years.
QUOTES
Michael Davis, Head of Global
Retirement Strategy at T. Rowe
Price, and former Deputy Assistant Secretary of the U.S.
Department of Labor
"Every year, this study provides us with fresh insights about
the evolving preferences and priorities of DC consultants,
advisors, and their clients, as well as the opportunities they face
in a retirement marketplace that's more dynamic than ever. It
follows a new, agnostic, patent-pending framework we unveiled
in June to help DC plan sponsors evaluate retirement income
offerings and quantify which solutions may best fit the needs and
preferences of their plan participants. By continually asking
better questions, it is our aim to bring new and innovative
solutions to market."
Jessica Sclafani, Global
Retirement Strategist T. Rowe
Price
"Consultants and advisors are looking for solutions that offer
choice, personalization, flexibility and are cost-effective. This
becomes especially clear when observing how drastically
perspectives have shifted on retirement income in just three years
reflecting plan sponsors' increased engagement on the topic.
Our research shows there is no consensus solution when it
comes to retirement income; however, consultants and advisors rank
a systematic withdrawal capability, managed accounts with income
planning feature, and target date investments with a managed payout
feature as most appealing for the delivery of retirement
income."
The Defined Contribution Study was conducted during the first
quarter of 2024 and includes insights from 35 defined CONTRIBUTION
(DC) consultants and advisory firms with more than $7.5 trillion in assets under advisement. The
executive summary is available here.
ABOUT THE DEFINED CONTRIBUTION STUDY
The 2024
Defined Contribution Study population includes 35 defined
contribution consulting and advisory firms (71% consultant, 29%
advisor) with more than $7.5 trillion
in assets under advisement surveyed from January 12 – March
4, 2024. You may visit troweprice.com/dcio and refer to
the 2024 Defined Contribution Study material for
highlights from this study. Participating firms also received
a custom report comparing their firm's responses to the aggregate
responses.
ABOUT T. ROWE
PRICE
Founded in 1937, T. Rowe Price (NASDAQ – GS: TROW) helps individuals
and institutions around the world achieve their long-term
investment goals. As a large global asset management company known
for investment excellence, retirement leadership, and independent
proprietary research, the firm is built on a culture of integrity
that puts client interests first. Clients rely on the award-winning
firm for its retirement expertise and active management of equity,
fixed income, alternatives, and multi-asset investment
capabilities. T. Rowe Price serves
millions of clients globally and manages US $1.59 trillion in assets under management as of
July 31, 2024. About two-thirds of
the assets under management are retirement-related. News and other
updates can be found on Facebook, Instagram,
LinkedIn, X, YouTube, and
troweprice.com/newsroom.
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SOURCE T. Rowe Price Group
