Business Development


401(k) Advisors have a New Look

The ongoing surveys of Advisors in 401(k) conducted by Brightwork Partners document major channel shifts over recent years. Looking back to 2005, insurance – and wirehouse – affiliated advisors dominated the sale and service of 401(k) plans; together these two channels comprised 62% of all Advisors active in 401(k). By last year that had fallen to 35%. Where have all those Advisors gone? To Independent Broker-Dealers and RIA shops. In 2005 those two channels were the primary affiliation of just 21% of all 401(k) Advisors; in 2013 that increased to 45%. RIAs alone grow from 8% of all 401(k) Advisors to 20% and are now the single largest channel. By RIA here we mean what we dub the “pure” RIA, those that tell us that RIA is their primary affiliation, generally un-affiliated with any broker-dealer.

Primary Affiliation of Advisors active in 401(k)

Affiliation 2005 2013
Insurance 37% 17%
Wirehouse 25% 18%
Regional BD 8% 10%
Independent BD 13% 25%
RIA 8% 20%
All Others 9% 10%

As dramatic as the “pure” RIA appears, it understates the influence of the RIA business model (fee-based and fiduciary) on the 401(k) market. An additional 35% of advisors are “hybrids” or dually registered – meaning that fully 55% of advisors wrote at least some 401(k) business as an RIA or IAR in 2013 (up from 44% in 2012). Concomitant with the growth of RIAs, the march to fee-based compensation continues; for the first time the majority of all advisors (54%) described themselves as mainly fee-based in 2013, up from 24% in 2005.

By: Ron Bush







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