Defined contribution plan providers, faced with downward fee pressure, stand to gain from offering more financial planning services — and wealth managers could benefit as well, according to a recent report.

Recordkeepers, plan advisors and other defined contribution providers are already positioned to provide retirement planning services beyond their defined contribution plans, Cerulli Associates says in a new report.

For example, 34% of active 401(k) participants say their 401(k) provider is where they turn to first for retirement planning and financial advice, compared to 16% who say they rely on a financial professional, according to the report.

Meanwhile, Cerulli believes further fee pressure in the recordkeeping space will arise from legal and regulatory developments as well as industry consolidation. The wealth management space, on the other hand, has been mostly “insulated” from fee compression, making financial planning and wealth management “more lucrative than pure-play recordkeeping relationships,” according to the report.

At the same time, advisors already play a significant role in retirement plan participants’ financial lives: by Cerulli’s estimates, over $440 billion in defined contribution assets rolled over into individual retirement accounts had the help of an advisor last year.

Advisors hoping to get in on the rollovers will need to start their relationships with plan participants early, however: Cerulli found that 86% of rollover assets in which an advisor assisted were through existing advisor relationships.

“For wealth managers looking to capture rollovers from DC plans, this data underscores the importance of establishing and nurturing relationships with participants earlier in their careers, years prior to potential rollover events,” Shawn O’Brien, associate director at Cerulli, said in a statement.

Cerulli also believes the current defined contribution plan landscape will lead to more synergies between wealth managers and defined contribution plan providers.

“By harmonizing their DC and wealth businesses, firms can manifest meaningful financial benefits for both franchises. Factoring in the expected ancillary revenue from converting DC participants to wealth management clients may allow firms to offer more competitive pricing on the DC side, helping them win additional mandates,” O’Brien said in the statement.

Do you have a news tip you’d like to share with FA-IQ? Email us at