Who Are The Advisors In The 401(k) Market And Where Are They Headed?

Tuesday, December 06, 2011 08:29
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Who Are The Advisors In The 401(k) Market And Where Are They Headed?

Tags: 401(k)

Retirement plans are seen as a massive untapped opportunity for advisors, but these accounts remain a sideline for most professionals who actually work with them, research firm Cogent says.

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A full 52% of the advisors who work with 401(k)s and other retirement plans are "dabblers" for whom the business represent maybe 5% of their AUM.

 

It's a broad market -- Cogent says there are 315,000 advisors with a toehold in this space -- but even at the high end, these accounts don't get very large at all.

 

As such, there is a vast amount of room for consolidation as the "dabblers" start working together or offload their 401(k) business to bigger competitors.

 

While only 7% of 401(k) advisors have collected more than $25 million in AUM from this side of their practice, the sheer size of the population means that fraction represents 22,000 advisors -- sharing at least $485 billion in client assets.

 

At this level, they're supporting an average of 30 plans apiece, so these are big players.

 

It's a very different business model from the white-glove high-net-worth business, but it's just getting started.

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