Background: The DCIIA RRC partnered with TRAU to interview 18 defined contribution (DC) recordkeeping senior executives. The goal was to explore the key threats and opportunities facing the DC recordkeeping industry and their individual firms. These findings were then discussed with industry leaders at the TRAU Roundtable in Washington, DC, in early June.

Findings: The interviews found that fee compression and market volatility are the two primary forces negatively impacting operational efficiency and stifling innovation, whether achieved through expansion or acquisition. Innovation is further constrained by heightened litigation risk, which is prompting increased caution.

In response, recordkeepers pointed to strategies they are utilizing to offset these pressures. To create new revenue streams, they are moving both up or down market and leveraging state mandates, which are creating a pathway for employers to convert public-sector plans into private-sector offerings. They are also improving access to and affordability of start-up plans and identifying cross-selling opportunities within their

commercial client base. PEPS have also been growing in popularity and moving up-market. In addition, measures such as eliminating channel conflicts where relationships can be poached and restricting customization in the micro-market segment are seen as ways to protect their operational efficiency.

Bottom Line: Recordkeepers are facing real pressures that are making it harder to operate efficiently. In response, many are taking both proactive and protective steps to stay competitive and maintain efficiency. The DCIIA RRC will continue to follow and report on developments in the recordkeeping space.

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