Advisors Increasingly Convert 401(k) Participants into Wealth Clients, FUSE Finds
Financial advisors are making measurable headway turning defined contribution (DC) plan participants into broader wealth management clients, pointing to what FUSE Research Network calls an accelerating convergence between retirement and wealth advice.
New research from Advisor Insight, FUSE’s advisor benchmarking service, finds that even though most advisors are not dedicated retirement plan specialists, 62% of advisors surveyed report converting at least 6% of DC plan participants into wealth management clients.
Engagement with DC plans remains concentrated. Only 9% of advisors surveyed serve more than 20 plans, while 26% do not serve any DC plans at all. Still, most advisors that do have workplace retirement relationships are managing to convert participants.
“Advisors are increasingly willing to serve a handful of DC plans — often 401(k) plans tied to existing business-owner clients — because participants represent one of the most efficient sources of new wealth relationships,” said Loren Fox, Co-Manager of Advisor Insight at FUSE Research Network. “In fact, 65% of advisors tell us converting plan participants is easier than acquiring clients through traditional marketing or referrals.”
Scale appears to amplify results: among advisors managing more than $500 million in assets, 41% converted more than 15% of plan participants into wealth clients, versus 28% of advisors with under $100 million who reached that mark.
A key driver is the growing use of financial wellness programs by DC plan sponsors, which expands the advisor’s remit from plan committees to direct participant engagement. Nearly 60% of surveyed advisors now offer holistic financial advice or one-on-one consultations to participants in the DC plans they advise.
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