Retirement plan advisers report working with fewer asset managers than they did in the past, according to a study from Sway Research.
Almost half of advisers specializing in defined contribution plans (48%) and just more than half of generalist retirement plan advisers (58%) said they work with fewer money managers, the 152-page study found.
The downward pressure on fees is causing many advisers to move toward passive asset managers, which are much smaller in number than active managers, said Chris Brown, principal of Sway Research.
"It's a smaller universe essentially to choose from on the passive side," Mr. Brown said.
Many advisers — particularly "resource-constrained" specialist advisers — might also be working with fewer asset managers to become more efficient, Mr. Brown said. They might reduce the number of asset managers "coming through the door every quarter" from let's say 30 to 20 or even 15 to save time and resources, he said.
In addition, more specialist advisers are outsourcing the task of selecting and monitoring asset managers to 3(38) and 3(21) fiduciary advisers, a decision that reduces the number of asset managers with which they work.
Advisers see outsourcing as a way in which to "cut some corners" without sacrificing their interactions with plan sponsors and participants, which they view as critical to their business, Mr. Brown said.
The study surveyed 180 retirement plan advisers with at least $10 million in defined contribution assets under management and 10 plans as clients. Specialist advisers averaged $1.1 billion in assets, while generalist advisers averaged $120 million. The survey was conducted between June 18 and July 9.
