Leveraging Data and Analytics to Drive Your DCIO Business
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This document summarizes a presentation about leveraging data and analytics to drive business in the defined contribution and defined contribution investment only (DCIO) markets. It discusses the complexity of product distribution in these markets and challenges with lack of data transparency and standards. It analyzes data on retirement plan advisors and platforms to provide insights into the "advisor driven" DC market. The conclusions recommend strategies for using data to identify best prospect advisors and plans, gain insights through linking varied data sources, and support territory management and competitive analysis to drive business growth.
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Leveraging Data and Analytics to Drive Your DCIO Business
- 1. Dan Cwenar President and General Manager Access Data, a Broadridge Company Leveraging Data and Analytics to Drive Your DCIO Business February 10, 2014
- 2. 2 Today • Product distribution • Retirement channel distribution • Insights into the “advisor driven” DC market • Conclusions
- 3. 3 I: Expectations are high
- 4. 4
- 5. 5 II: Framework for thinking about data Volume Velocity Variety Veracity Inversely proportional? Doug Laney, 2001
- 6. 6 III: Data solutions versus rules-based solutions • Payroll and accounting solutions are rule dependent • Data solutions • Not knowing all the questions is OK • “Directional” idea: “I want to understand DCIO distribution”
- 7. 7 IV: Role of variety • Big Data can indeed be BIG • +55,000 files per month • 1x1010 data points • Variety
- 9. 9 Generic product distribution is complex and dynamic1 92.4 million Investors 290 million accounts, 54 million households 38,160 Sales & Distribution Professionals +500,000 Advisors, +20,000 Firms 16,380 Products Manufacturers distribute products directly to investors 776 Fund Sponsors, $16 Trillion AUM Manufacturers distribute products via intermediaries to investors 1. Data based on the 2013 ICI Fact Book, ICI Quarterly update bulletins, and Broadridge proprietary research
- 10. 10 Industry trends create unique data challenges • Omnibus accounting less transparency • Lack of data exchange standards poor data quality and management • Regulatory environment fee scrutiny, held away assets, revenue sharing • Complex distribution environment many data islands • Difficulty finding the right advisors 500,000 advisors with different needs and preferences Intermediary 1 Intermediary 2 Intermediary 3 Intermediary 4 Intermediary 5 Intermediary n Mfg 1 Mfg 2 Mfg 3 Mfg 4 Mfg 5 Mfg n Typical Data Exchange Process
- 11. Retirement Channel Unique transparency challenges
- 12. 12 Components of product distribution1 Manufacturers +700 Products +16,000 Sales / Ops +38,000 professionals Intermediaries +20,000 firms Advisors +500,000 Investors +92M / $16T Generic 3rd party distribution model 1. Data based on the 2013 ICI Fact Book, ICI Quarterly update bulletins, and Broadridge proprietary research
- 13. 13 New entities are introduced1 Plan Participants Plan Sponsors Plans (large versus small) Record Keepers and TPAs Advisors (DC specialists) Manufacturers +700 Products +16,000 Sales / Ops +38,000 professionals Intermediaries +20,000 firms Advisors +500,000 Investors +92M / $16T 1. Data based on the 2013 ICI Fact Book, ICI Quarterly update bulletins, and Broadridge proprietary research
- 14. 14 Product distribution becomes MORE complex1 Manufacturers +700 Products +16,000 Sales / Ops +40,000 professionals Distributors / TA +20,000 firms Advisors +500,000 DC Record Keepers / TPAs +1,500 DC Plans +650,000 Plan Sponsors +450,000 Plan Participants +88M / $5.6T Advisors (DC Specialists) +5,000 Without data and analytics, finding these advisors is challenging The 1% Problem Manufacturers +700 Products +16,000 Sales / Ops +38,000 professionals Intermediaries +20,000 firms Advisors +500,000 Investors +92M / $16T DC Distribution3rd Party Distribution 1. Data based on the 2013 ICI Fact Book, ICI Quarterly update bulletins, and Broadridge proprietary research
- 15. 15 Fastest growing segment of employer sponsored plans (27% 1985 / 41% 2012) 1. Data based on the 2013 ICI Fact Book, ICI Quarterly update bulletins, and Broadridge proprietary research Context of “advisor driven” assets1 DC – MF $3.3T (59% of DC) DC: 401k, 403b, 457, Keogh $5.6T (26% of Retirement) IRA, DC, Private DB, Government, Annuity $21.9T
- 16. 16 Advisors target small to medium DC Plans. These plans overwhelmingly employ Mutual Fund products. Fastest growing segment of employer sponsored plans (27% 1985 / 41% 2012) 1. Data based on the 2013 ICI Fact Book, ICI Quarterly update bulletins, and Broadridge proprietary research DC: 401k, 403b, 457, Keogh $5.6T (26% of Retirement) IRA, DC, Private DB, Government, Annuity $21.9T DC – Advisor Driven $2.0T (36% of DC) Context of “advisor driven” assets1
- 17. 17 Total Assets $2T Advisor Sold DC Plans 450K of 650K (70%) Advisor Sold DC Participants 49M of 88M (56%) Independents $1.6T $.4T Supermarket-driven 1. Data based on Broadridge proprietary research Advisor driven DC landscape1
- 18. Advisor Driven DC Market Platform Insights
- 19. 19 Advisor driven DC assets by platform type1 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 Mutual Fund Platform Supermarket Platforms Insurance Platforms Advisor Driven: $2T 1. Source: Plan Sponsor Survey and Broadridge proprietary research 20% 39.0% 60% BillionsofDollars 20%
- 20. 20 DC plans by platform type1 - 50,000 100,000 150,000 200,000 250,000 300,000 350,000 Supermarket Platforms Mutual Fund Platform Insurance Platforms Advisor Driven: 450K Plans 4% 1. Source: Plan Sponsor Survey and Broadridge proprietary research NumberofPlans 67% 29%
- 21. 21 Top Fund, Supermarket, and Insurance platforms1 1. Source: Retirement Plan Sponsor Survey Asset Rank Firm Millions of $ Plans Average Plan Size ($) 1 ING 301,720 47,718 6,322,981 2 Great West 178,166 27,266 6,534,365 3 Principal 136,987 47,857 2,862,423 4 Mass Mutual 104,318 37,159 2,807,341 5 Transamerica 82,292 20,345 4,044,827 6 Nationwide 79,161 40,698 1,945,083 7 John Hancock 71,105 44,620 1,593,568 8 Lincoln 48,940 23,429 2,088,864 9 New York Life 32,595 1,650 19,754,545 10 OneAmerica 18,100 9,700 1,865,979 1,053,384 300,442 3,506,114 Asset Rank Firm Assets (millions of $) Plans Average Plan Size ($) 1 Fidelity 1,096,623 32,293 33,958,536 2 Prudential 199,488 5,145 38,773,178 3 Schwab 109,363 1,164 93,954,467 4 Ascensus 41,973 41,338 1,015,361 5 ADP 40,473 35,384 1,143,822 6 American Funds 37,648 34,686 1,085,395 7 Newport 23,422 2,261 10,359,133 8 CUNA Mutual 11,315 6,214 1,820,888 9 Daily Access 8,050 1,595 5,047,022 10 Aspire 5,637 6,056 930,812 1,573,992 166,136 9,474,118
- 22. Advisor Driven DC Market Advisor Insights
- 23. 23 Advisor affiliation: advisors selling one or more plans1 - 10,000 20,000 30,000 40,000 50,000 60,000 Banks and Trust Companies RIA Independent / Regional BDs Wirehouse 68% 22% 5%5% 1. Source: Broadridge proprietary research NumberofDCAdvisors
- 24. 24 Advisors selling DC plans1 85K 67K 18K - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 Total Advisors Selling DC Plans Advisors on One Platform Advisors on Multiple Platforms 79% 21% 100% 1. Source: Broadridge proprietary research NumberofDCAdvisors
- 25. 25 3.68 2.2 1.3 - 1 2 3 4 Retirement Specialists Retirement Users Total Participating Advisors Top advisors by number of platforms1 5K Advisors 13K Advisors 85,000 Advisors 15% (of 85K) 6% (of 85K) or 1% (of 500K) 1. Source: Broadridge proprietary research NumberofDCAdvisors Further segment the 18K who are affiliated with multiple platforms…
- 26. 26 20+, 16% 10-19, 24% 5-9, 25% 1-4, 35% Currently Manage in 2012 Average number of plans managed per year1 BASE = Advisors with 5%+ AUM in 401(K) Plans 1. Source: Cogent Research, Retirement Plan Advisor Brandscape® 2012 20+, 24% 10-19, 25% 5-9, 28% 1-4, 23% Anticipate in 2013
- 28. 28 I: Conclusions: Strategies for driving growth • The advisor driven DC market is significant and growing • Gaining insights into this market can be challenging • Finding the needle in the haystack can be challenging (1% problem) • Use data to identify best prospects
- 29. 29 II: Conclusions: Strategies for driving growth • A data management program is key to growing your business • Data live everywhere and change daily • “VARIETY”: Link retirement specialists with their associated plans • Segmentation
- 30. 30 III: Conclusions: Strategies for driving growth • “Data Insights” support: • Territory management / sales staff allocation • Competitor analysis (region, product, and channel) • Compensation plans and management • Using multi-channel communications, engaging content and education • Measure results / modify approach
- 32. Thank You Leveraging Data and Analytics to Drive Your DC and DCIO Business February 10, 2014