American Funds has retained its top ranking as a company trusted by defined contribution plan advisors, a new survey has found. American Funds is a family of mutual funds, 529 savings plans and variable annuities sold through advisors and broker/dealers.
The fund company was the clear winner among the top-five established defined contribution asset managers with more than $10 million in defined contribution assets. Clumped tightly behind American Funds were Fidelity Investments, Vanguard, BlackRock and Franklin Templeton Investments.
These findings were part of a Cogent Reports study by the research firm Market Strategies International. The study surveyed 508 advisors in the brokerage, bank and registered investment advisor distribution channels.
Sonia Sharigian, senior product manager at Market Strategies and author of the “Retirement Plan Advisor Trends” report, said that the power of brand trust had become more important in an era governed by tighter regulation.
Defined contribution plans are also under legal challenges by plaintiffs who claim advisors and asset managers are charging too much.
“The power of brand trust and its resounding impact on brand consideration cannot be underscored enough — brand trust is vital for gaining traction among DC advisors as well as DC plan participants and affluent investors,” Sharigian said.
Advisor trust in an investment manager’s brand is based on a number of factors. They include thought leadership, the reliability of an asset manager in retail channels, the support the asset manager provides advisors and distributors, fees, customer service, and product selection.
For asset managers, the issue of trust has become “table stakes” without which an asset manager can’t hope to grow or get ahead in the defined contribution plan market.
“The role of brand trust is getting more pronounced across a lot of audiences,” Sharigian said.
DOL Rule Weighing More Heavily
Asset managers have an opportunity to differentiate their brand by helping advisors with changes associated with the Department of Labor’s fiduciary rule. Complying with the rule is weighing heavily on advisors, Sharigian said.
Any support asset managers can provide advisors will raise the profile of managers in the eyes of advisors, she added.
The survey found that 73 percent of advisors surveyed agreed that the fiduciary rule is moving the industry toward a fee-based compensation structure.
The survey also found that 44 percent of advisors said the rule would alter advisors’ approach to advising plan participants on rollover and distribution options.
On June 30, defined contribution plans held $7 trillion in assets or about 29 percent of all U.S. retirement assets, data from the Investment Company Institute show.
Of the $7 trillion in defined contribution plan, $4.9 trillion was held in 401(k) plans, according to the ICI data.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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