Cerulli Associates has identified six "niche" segments of the retirement planning space that it says are experiencing "burgeoning growth" and present asset-gathering opportunities for advisors.
In its most recent edition of The Cerulli Edge: Retirement Edition, Cerulli notes that while the primary retirement markets—401(k), 403(b), public and private DC and DB, and traditional and Roth IRAs—represent nearly $14 trillion in 2010, the six niche markets, which currently represent only $1 trillion, are prime areas of growth and asset-gathering potential "for firms willing to look beyond the crowded mainstream retirement markets."
According to Cerulli, the six niche opportunities, and the reasons for their growth, are as follows:
|- Taft-Hartley Plans: In an effort to improve their funded ratios, these plans–also referred to as multi-employer plans–are primed to increase their allocation to international investments as they seek to improve performance.
- Nonqualified Deferred Compensation Plans (NQDCP): As economic conditions improve, hiring activity will lead employers to consider enhancements to benefit plans, such as adding an NQDCP, in order to gain an edge in the competition for talent.
- 457 Plans: While-asset gathering opportunity is limited and specific, firms that are able to offer a 403(b) plan together with a 457 plan are poised to win assets as this combination allows for the creation of higher balance accounts.
- 412i Plans: As defined benefit pension plans for small businesses, the asset manager opportunity is limited in these plans due to requirements related to the funding vehicles used in them. There are opportunities, however, for BDs and insurance companies because plans are attractive to small, but very profitable businesses, typically characterized by highly compensated, late-career professionals with significant assets.
- Small Business IRAs: With 70% of small business owners not saving for retirement in any vehicle, these plans provide the solution, and thus can't be ignored by firms seeking asset-gathering opportunities.
- Solo 401(k) plans: Currently, the plans are growing, and they may be augmented by Baby Boomers who, working past retirement age, may see the flexibility of a sole-proprietorship arrangement, and desire to continue to save for retirement through this familiar vehicle.
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Melanie Waddell
Melanie is senior editor and Washington bureau chief of ThinkAdvisor. Her ThinkAdvisor coverage zeros in on how politics, policy, legislation and regulations affect the investment advisory space. Melanie’s coverage has been cited in various lawmakers’ reports, letters and bills, and in the Labor Department’s fiduciary rule in 2024. In 2019, Melanie received an Honorable Mention, Range of Work by a Single Author award from @Folio. Melanie joined Investment Advisor magazine as New York bureau chief in 2000. She has been a columnist since 2002. She started her career in Washington in 1994, covering financial issues at American Banker. Since 1997, Melanie has been covering investment-related issues, holding senior editorial positions at American Banker publications in both Washington and New York. Briefly, she was content chief for Internet Capital Group’s EFinancialWorld in New York and wrote freelance articles for Institutional Investor. Melanie holds a bachelor’s degree in English from Towson University. She interned at The Baltimore Sun and its suburban edition.
