Nearly half of advisors who sell defined contribution plans arepushing for an external manager for target-date funds for those plans.

And that means that record keepers can’t just assume that theirown proprietary TDFs will be at the top of the listfor participants.

That’s according to new Cogent Reports research from MarketStrategies International.

The “Retirement Plan Advisor Trends” report said that 47 percentof advisors selling DC plans are recommending an external managerfor TDFs instead of relying on the record keeper’s funds.

In addition, the more plan production rises, the more likely itis that external TDF offerings will be recommended.

Fifty-nine percent of DC specialists who manage $50 million ormore in DC assets under management are counseling plan sponsors togo farther than their current plan providers when considering TDFs,and look instead at the funds offered by external assetmanagers.

More than double the number of advisors, at 41 percent, suggestTDFs than those who recommend any other kind of qualified defaultinvestment alternative.

That means TDFs have leapfrogged to the top of the heap.

And maybe that’s not such a bad thing, considering that 401(k)plan service providers tilt toward their own products whensetting up plan lineups.

In fact, providers are guilty not only of favoring their ownfunds over others even when they perform worse than outsiders’products, but also of keeping those funds in plans despite theirpoor performance.

And that means that advisors who turn to outside TDFs could besteering plan sponsors in the right direction for participants.

“Full-service plan providers cannot rely on assets simplyflowing in because they are the incumbent record keeper,” SoniaSharigian, senior product manager and report coauthor at MarketStrategies, said in a statement.

She added, “Now more than ever, plan providers need to competewith a crowd of other DC investment managers, who will likely tohave more opportunity to showcase their target date solutions.”

TDFs are also the second most popular investment options thatadvisors include in their recommended lineups, after traditionalactively managed mutual funds.

Index funds are doing extremely well, too, with almost threequarters (73 percent) of established DC advisors recommending themto clients. That’s up from 64 percent in 2014.