Financial advisors are making headway in converting employer-sponsored retirement plan participants into wealth management clients, a new survey found. In fact, many advisors say they find it easier to turn plan participants into clients than acquiring clients through traditional channels.
The research, which Fuse Research Network's benchmarking service Advisor Insight released Wednesday, suggests that the convergence between retirement and wealth advice is accelerating, according to the firm. While most advisors aren't dedicated retirement plan specialists, 62% of the pros surveyed reported converting at least 6% of defined contribution plan participants into wealth management clients.
Only a small percentage of advisors at RIAs and broker-dealers do more than dabble in counseling such plans, the firm said, noting that 9% of advisors surveyed work with more than 20 plans, while 26% don't serve any defined contribution plans at all. Nonetheless, a majority are finding success by engaging participants through workplace retirement relationships, according to FUSE.
"Advisors are increasingly willing to serve a handful of DC plans — often 401(k) plans tied to existing business-owner clients — because participants represent one of the most efficient sources of new wealth relationships," said Loren Fox, Advisor Insight's co-manager. "In fact, 65% of advisors tell us converting plan participants is easier than acquiring clients through traditional marketing or referrals."
Bigger advisory businesses tend to fare better in converting plan participants into clients, the research shows. Among advisors with over $500 million in assets under management, 41% converted more than 15% of plan participants into wealth clients, while 28% of advisors managing under $100 million in client assets achieved that rate.
Bigger size doesn't always mean more conversions, however. Among advisors with $100 million to $250 million in AUM, 33% converted over 15% of plan participants, while only 29% with AUM from $250 million to $500 million turned over 15% of plan participants into wealth management clients, according to Fuse.
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