Building a defined contribution retirement plan transformational strategy

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The defined contribution (DC) retirement market remains one of the highest-growth markets in the financial services industry, with assets under management close to $9 trillion at the end of 2019, at 8% compound annual growth rate from 2018. That said, this market is not immune to the disruption and uncertainty caused by the COVID-19 pandemic, with plan sponsors evaluating cost-cutting mechanisms and participants who have lost jobs using retirement accounts to cover income shortfalls.

Prior to the pandemic, the industry witnessed immense pricing pressure from asset concentration in interest rate products and subsequent decreased margins from a continued low interest rate environment followed by lower proprietary fund adoption for new deals. This has resulted in recordkeepers having to look beyond asset acquisition and into either M&A or providing products across other adjacent financial needs of their participants.