In their quest to grow defined contribution sales over the next year,asset managers and recordkeepers are looking at boutique DCconsultants as likely targets.

Research from Cerulli Associates found that, with theadvisor-sold and DC institutional markets saturated, the middlemarket is looking like the next likely sales target.

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Plans with assets ranging between $25–$250 million fit neatlyinto that category and squarely into their crosshairs, withboutique DC consultants identified as the most influentialintermediary within the middle market.

Defined contribution-investment only asset managers alsohighlighted the mid-sized DC plan market, and in particular, theboutique DC consultant, as offering the best opportunities toincrease DC assets and revenue.

The data indicate that the boutique DC consultant, which Cerullisaid was a relatively new category, is considered an importantopportunity by nearly half of respondents (48 percent).

In fact, it’s actually ahead of broker-dealer-based advisors andnational investment consultants, which the study said are both moretraditional intermediary channels.

So how to define a boutique DC consultant?

There’s no strict categorization, Cerulli said, but such firmstend to have a legacy in benefits consulting, or are retirementspecialist advisors that have evolved to focus almost solely on DCplans and are now attracting plans with significantly greaterassets than the typical reach of a retirement specialistadvisor.

Some firms, it said, are retirement-focused RIAs, while othersare consultant practices that reside in a wirehouse. Classicexamples of boutique DC consultants include CAPTRUST, SageView andLockton.

The two biggest challenges for DCIO asset managers in 2015continue to occupy their attention. Demand for passive products,regarded by 61 percent as a major challenge and 25 percent assomewhat of a challenge, and heightened competition for assets,regarded by 46 percent as a major challenge and 50 percent assomewhat of a challenge, are both market forces to be reckonedwith.

Among other issues they face are these:

• pressure on investment management fees

• increasing contributions to target-date funds

• plan sponsor inertia

• investment performance/not meeting screening criteria

• plan sponsor fear of litigation

• pressure on administrative fees

• streamlining of investment menus