Retirement plan advisors (RPAs) and recordkeepers have a real challenge on their hands: wealth advisors are coming for their turf. And honestly, it’s not hard to see why. With nearly 100 million 401(k) participants and $14 trillion in assets, the opportunity to convert plan participants into full-fledged wealth management clients is simply too large to ignore. Research shows that most wealth advisors convert at least 6% of participants into wealth clients, with larger firms achieving conversion rates as high as 17%.
Wealth advisors also bring meaningful advantages. They often have deeper financial planning expertise, greater scale, and — importantly — established relationships with the business owners who sponsor these retirement plans. Broker-dealers are taking notice as well, increasingly encouraging advisors to enter the defined contribution space, recognizing the profitability of combining retirement advisory with wealth services.
At the same time, RPAs are facing pressure from declining fees and rising expectations from participants who want more education, guidance, and personalized support. That’s a difficult position for firms built primarily around plan-level services.
The reality is clear: firms that successfully connect retirement planning with broader wealth management and financial wellness — through acquisitions, partnerships, technology, or financial coaching — will be better positioned for the future. Those that don’t risk watching wealth advisors step in to capture the opportunity.
Read more insights in Fred Barstein’s latest WealthManagement.com article, “RPAs Face Growing Competition from Wealth Advisors over 401(k) Participants.“
