Further Understanding Defined Contribution

In its 13th year, the PIMCO Defined Contribution Consulting Study, formerly the DC Consulting Support and Trends Survey, seeks to help consultants, advisors and plan sponsors understand the breadth of views and consulting services available within the defined contribution (DC) marketplace. This year’s study was expanded to include a more diverse set of respondents across the spectrum of the DC industry’s consultants and advisors.

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238 Consulting and Advisory Firms

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109,000 Clients Served

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DC Assets in Excess of $4.9 Trillion

Adding and Learning from our Report of Consultants Serving Large/Mid-sized Plans

Our Report of Consultants Serving Large/Mid-sized Plans captures data, trends and opinions from 32 consulting and advisory firms, who serve over 3,750 clients with aggregate DC assets in excess of $4 trillion

Large/Mid-sized Consultants were identified as having both $5 billion or more in DC assets under advisement and a median plan size over $50 million.

As Plan Auto-Features Become Widely Accepted, Plan Design Evolution Turns to Retirement Income

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Three out of five (62%) consultants believe a majority of their clients prefer to retain and serve retirees in-plan, up 14% from 2018.

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Two-thirds of consultants recommend the adoption of a retirement tier to be populated with a variety of retirement income solutions vs. an all-in-one.

Differentiation is Critical

For consultants, the need to differentiate is high given the significant overlap in common services. Cost and fee analyses, record keeping searches and manager selection services continue to be the highest reported areas of growth.

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White Label and Custom Target-Date Fund Strategies Have Significant Usage in the Largest Plan Segment

Consultants believe superior portfolios can be achieved through the use of custom strategies; consultants see fixed income and equity as best applications yet recognize there’s added operational complexity.

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A Shift in Client Priorities: Validate the Default, Then the Costs

Consultants indicate client focus has shifted, with reviews of the target-date fund now the highest priority, followed by evaluation of plan cost and simplification of investment menus.

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There is Strong Advocacy for Active Management in Both U.S. and Non-U.S. Bond Strategies as Well as Emerging Market Equities

This philosophy manifests itself in both core menu design and preferences for target-date funds.

For plans of $1B or less, the most preferred target-date design is a packaged blend strategy that combines active/passive management, versus 100% passive. Within core menus, consultants overwhelmingly favor active management for both capital preservation and fixed income options.

Recommended Target-Date Offering, by Plan Size

$1B and above
59% 25% 3% 6% 6%
$500 to less than $1B
22% 47% 6% 16% 9%
$200M to less than $500M
9% 50% 3% 25% 13%
$50M to less than $200M
6% 47% 3% 31% 13%
Less than $50M
6% 44% 3% 28% 16%
  • Custom
  • Packaged Active/Passive Blend
  • Packaged active multi-manager
  • Single-manager passive
  • Single-manager active

Not There, Yet: Financial Wellness

Three quarters of consultants rate such financial wellness programs as “somewhat effective”.

17% 74% 9%
  • Not Very Effective
  • Somewhat Effective
  • Very Effective

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