The percentage of defined contribution plan assets devoted to record keepers' proprietary funds will continue to decline, giving other money managers an opportunity to expand their DC asset sales, McKinsey & Co. said in a report issued Thursday.
According to McKinsey's projections, record keepers' proprietary funds will account for 36% of aggregate DC plan assets by 2018 vs. 57% for other money managers and 7% for company stock.
In 2009, McKinsey estimated that record keepers' proprietary funds represented 45% of aggregate DC plan assets, while other money managers accounted for 44% and company stock represented 11%, the report said.
And by last year, McKinsey estimated that record keepers' proprietary funds represented 37% of aggregate DC plan assets while other money managers accounted for 54% and company stock represented 9%.
According to McKinsey, other money managers include defined contribution investment-only firms as well as record keepers whose investment products are selected by DC plans using another record keeper.
“It's been a continuous shift,” Celine Dufetel, a principal at McKinsey, said in an interview describing the declining influence of record keepers' proprietary funds.
The major reasons for the shift are “a greater influence” of consultants and advisers, greater fiduciary pressure on DC plans and greater pressure for reducing fees, Ms. Dufetel said, the lead author of the report. The report is based on several data sources, McKinsey's economic model and interviews with about 40 DC plan executives and consultants.
The report estimated that total DC plan assets reached $5.8 trillion last year, up from $4 trillion in 2009. McKinsey predicted total DC plan assets would hit $7.7 trillion in 2018.